From legalnews.com, we have the story that perhaps only two tenths of one percent of the population is subject to estate taxes. This, compared to "eight to ten percent of the population" in the 1970's.
The reason is that the standard exemption from estate taxation rose to $5 million when President Obama signed a compromise budget bill into law in the last days of 2010. The compromise is, however, set to expire beginning in 2013, resetting the exemption level to $1 million if Congress fails to act.
No tears should be shed, though, for estate and probate practitioners, we are later told in the same article. As the baby boom generation retires and (alas) begins to pass away, probate litigation is increasing at a brisk pace.
Finally, opines the author of the article, "the recession has created more probate litigation since family members are disappointed with their inheritance."
In divorce actions, the family dog often keeps couples in court longer than the bank accounts.
In estates, it's the heirloom quilt, the favorite sweater, or the bird-hunting gun that causes the most acrimony among heirs.
If drafters of wills and trusts want to avoid squabbling among their heirs, they would do well to give some thought to how their huge inventory of personal property should be divided .
A frequently used method among estate attorneys is the family "auction." An executor dividing up an estate may allow heirs to "bid" for items, using not cash but an "account" consisting of the total amount to which they would have been entitled pursuant to the will.
As an example, suppose an estate has three heirs and (for simplicity's sake) fifteen items of personal property. The executor gives each heir five credits and tells them to select five pieces of property from the fifteen. Naturally, at some point, two heirs will want the same one piece of property - say an heirloom broach. The executor then allows these heirs to "bid" on the broach with their five credits. The highest bidder allocates four credits and is given the broach. The credits are then divvied up among the other two heirs , who use them to bid on the remaining property.
This scheme can be used a myriad of different ways as long as the goal of the "auction" is an equal distribution of the property according to its subjective value.
One more note: at least one website, E-divvy-up (edivvyup.com) allows heirs to do exactly this via an online auction. For $49 per auction, many estate executors may find its services well worth the price and a solid way to avoid family acrimony or possible litigation.
Tanner Pittman, LLC advises clients on probate and estate settlements and is experienced in litigation involving probate matters.
Tanner Pittman, LLC is a West Georgia law firm that specializes in estate services, civil litigation, and legal transactions.
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