Let's look at an example with 5 siblings evenly dividing their parents' estate.
- Amy
- Shane
- Lucas
- Alex
- Eddy
- Childhood home in Northern Virginia
- Beach cottage in Virginia Beach
- The father's guitar collection
- The mother's art collection
Each of the 5 siblings places a monetary value on the 4 items. The value should reflect not only the value of the item(s) in a free market, but also the additional value based on their sentimental attachments to the item(s). These are the values they separately come up with:
![Picture](/uploads/4/8/5/4/48543231/450256.png?571)
Therefore, Amy gets the cottage, Shane gets the guitars, Lucas gets none of these items, Alex gets the art collection, and Eddy gets the childhood home.
Each person must pay into the pot (to be divided evenly) 80% of what they valued the item they get.
At this point, there are $1,427,200 in the pot.
Then, from the pot, each person takes 20% (his/her share) of the values he/she placed on the items he/she did not get.
Amy gets 20% of $700,000, 20% of $20,000, 20% of $42,000 or $152,400
Shane gets 20% of $500,000, 20% of $600,000, 20% of $45,000 or $229,000
Lucas gets 20% of $600,000, 2 0% of $500,000, 20% of $12,000, 20% of $40,000 or $230,400
Alex gets 20% of $650,000, 20% of $450,000, 20% of $15,000 or $223,000
Eddy gets 20% of $450,000, 20% of $16,000, 20% of $35,0 00 or $100,200
The total taken from the pot at this point is $935,000. If we subtract this from the $1,427,200 that was in the pot before, we see that $492,200 are left in the pot. This money is to be divided evenly among all five of the siblings. Each sibling would get an additional $98,440 from this money.
Amy got the cottage to which she assigned a value of $900,000.
$900,000 (cottage) - $720,000 (in the pot) + $152,400 (house, guitars, art) + $98,440 (pot remainder) = $430,840
Shane got the guitar collection to which he assigned a value of $90,000.
$90,000 (guitars) - $72,000 (in the pot) + $229,000 (house, cottage, art) + $98,440 (pot remainder) = $345,440
Lucas did not get any of these four items.
$230,400 (house, cottage, guitars, art) + $98,440 (pot remainder) = $328,840
Alex got the art collection to which he assigned a value of $75,000.
$75,000 (art) - $60,000 (in the pot) + $223,000 (house, cottage, guitars) + $98,440 (pot remainder) = $336,440
Eddy got the childhood home to which he assigned a value of $800,000.
$800,000 (home) - $640,000 (in the pot) + $100,200 (cottage, guitars, art) + $98,440 (pot remainder) = $358,640
Amy thought the estate was worth $1,662,000 so she would have hoped to get $332,400. She got $430,840 so she would likely be happy with this method of division.
Shane thought the estate was worth $1,235,000 so he would have hoped to get $247,000. He got $345,440 so he would likely be happy with this method of division.
Lucas thought the estate was worth $1,152,000 so he would have hoped to get $230,400. He got $328,840 so he would likely be happy with this method of division.
Alex thought the estate was worth $1,190,000 so he would have hoped to get $238,000. He got $336,440 so he would likely be happy with this method of division.
Eddy thought the estate was worth $1,301,000 so he would have hoped to get $260,200. He got $358,640 so he would likely be happy happy with this method of division.
Each person must pay into the pot (to be divided evenly) 80% of what they valued the item they get.
- Amy pays 80% of $90,000 or $720,000 into the pot.
- Shane pays 80% of $90,000 or $7,200 into the pot.
- Lucas does not pay into the pot at this point.
- Alex pays 80% of $75,000 or $60,000 into the pot.
- Eddy pays 80% of $800,000 or $640,000 into the pot.
At this point, there are $1,427,200 in the pot.
Then, from the pot, each person takes 20% (his/her share) of the values he/she placed on the items he/she did not get.
Amy gets 20% of $700,000, 20% of $20,000, 20% of $42,000 or $152,400
Shane gets 20% of $500,000, 20% of $600,000, 20% of $45,000 or $229,000
Lucas gets 20% of $600,000, 2 0% of $500,000, 20% of $12,000, 20% of $40,000 or $230,400
Alex gets 20% of $650,000, 20% of $450,000, 20% of $15,000 or $223,000
Eddy gets 20% of $450,000, 20% of $16,000, 20% of $35,0 00 or $100,200
The total taken from the pot at this point is $935,000. If we subtract this from the $1,427,200 that was in the pot before, we see that $492,200 are left in the pot. This money is to be divided evenly among all five of the siblings. Each sibling would get an additional $98,440 from this money.
Amy got the cottage to which she assigned a value of $900,000.
$900,000 (cottage) - $720,000 (in the pot) + $152,400 (house, guitars, art) + $98,440 (pot remainder) = $430,840
Shane got the guitar collection to which he assigned a value of $90,000.
$90,000 (guitars) - $72,000 (in the pot) + $229,000 (house, cottage, art) + $98,440 (pot remainder) = $345,440
Lucas did not get any of these four items.
$230,400 (house, cottage, guitars, art) + $98,440 (pot remainder) = $328,840
Alex got the art collection to which he assigned a value of $75,000.
$75,000 (art) - $60,000 (in the pot) + $223,000 (house, cottage, guitars) + $98,440 (pot remainder) = $336,440
Eddy got the childhood home to which he assigned a value of $800,000.
$800,000 (home) - $640,000 (in the pot) + $100,200 (cottage, guitars, art) + $98,440 (pot remainder) = $358,640
Amy thought the estate was worth $1,662,000 so she would have hoped to get $332,400. She got $430,840 so she would likely be happy with this method of division.
Shane thought the estate was worth $1,235,000 so he would have hoped to get $247,000. He got $345,440 so he would likely be happy with this method of division.
Lucas thought the estate was worth $1,152,000 so he would have hoped to get $230,400. He got $328,840 so he would likely be happy with this method of division.
Alex thought the estate was worth $1,190,000 so he would have hoped to get $238,000. He got $336,440 so he would likely be happy with this method of division.
Eddy thought the estate was worth $1,301,000 so he would have hoped to get $260,200. He got $358,640 so he would likely be happy happy with this method of division.