Just last week I was listening to an estate planning attorney, Lee S. McCullough, III, tell of his discovery of the best system to divide up possessions after both parents have passed away. Considering he has had tons of experience with hundreds of family settlements, I took very good notes.
McCullough has observed over the years how dividing up stuff after the death of a parent is emotional…very emotional. Hearts are saddened. Time is short and there are many things to do. Surviving children must plan the funeral, prepare the obituary, take care of the parents’ house, be sure items that have been given by parents to surviving family members via wills/trusts have been distributed, and so forth.
But what about all the other items in a household that have not been bequeathed to anyone in particular but will still need to be divided up, such as kitchen appliances, furniture, dishes, etc.? To bring order to all this chaos, McCullough suggests holding a “family auction” where items that have not already been bequeathed can be bid on using fake money.
Here are his suggestions for holding the family auction:
- Establish ground rules. Print them and have everyone review them in advance of holding an auction.
- Make a comprehensive list of all assets to be auctioned off. Be sure each surviving child, or grandchild, reviews this list and knows what they really want the most. Prioritize assets.
- Children only. Only have the children (or grandchildren as appropriate) of the deceased parents attend the auction. No spouses are permitted. This is very important.
- Distribute fake money. Give out $20,000 of fake money to spend during the bidding process. Every person gets an equal chance to bid for what they want. When the $20,000 is spent but more assets are available, only then consider distributing another $10,000 to each participant. Everyone gets the same amount of fake money.
McCullough stresses that because surviving children will never have equal incomes and equal cash assets, the fake money auction is the best way to go in order to avoid hurt feelings among siblings. Some families decide to hold an actual real-money auction where siblings bid against the “real evaluation” of the assets. For example, there may be a baby-grand piano, which may have a value set at $5,000. A cash-rich child can dominate the auction trying to buy the piano and create hurt feelings among other siblings. Fake money levels the playing field.
McCullough has watched this play out over and over again. He said that children learn very quickly how to prioritize the fake $20,000 so they can get what they want. Also, he said there has not been the usual remorse after an auction is over, because if one of the surviving children really wanted something, they could have raised their bid amount and spent more of their $20,000 to get it.
We all know that money is emotional. We all hear about how families get torn apart trying to divide up their parents’ stuff after a funeral. By using fake money, holding an auction, and keeping spouses out of the picture, you can keep your family members grounded emotionally and help set the tone for family harmony at a time when hearts are tender.