Certain assets may require special consideration when creating an estate plan. Resources that have more financial value may require more planning than low-value personal property. The emotional value of assets and the memories that they may represent for beneficiaries can also be important considerations.
Testators drafting their estate plans often try to leave relatively balanced inheritances for all of their beneficiaries. In some cases, they might achieve that goal by leaving instructions for a personal representative to liquidate certain assets. If they own their own home or possibly a vacation property, such as a cabin, they might instruct their personal representative to sell the property and then distribute the proceeds from the transaction among specific beneficiaries.
Particularly in cases where loved ones might have an emotional attachment to real property, including the right of first refusal in an estate plan could be a clever move.
What is the right of first refusal?
The right of first refusal is a contractual inclusion that provides an opportunity to specific parties. When included in a will or trust documents, the right of first refusal typically provides an opportunity to acquire a specific asset.
The right of first refusal provides an opportunity to keep assets in the family if beneficiaries feel a strong connection to them. Allowing for a purchase enhances fairness. Simply leaving a high-value asset to a specific beneficiary might lead to resentment among other beneficiaries and could damage family relationships.
By allowing them an opportunity to purchase an estate resource, the testator protects family relationships while simultaneously ensuring that their legacy is fair to everyone. Before the personal representative lists a home or cabin for sale, they may first need to communicate with beneficiaries.
One of the beneficiaries might want to purchase the property. Provided that they agree to offer a fair market value for it, they could acquire the property from the estate without unfairly diminishing what other beneficiaries receive. Those intending to make use of the right of first refusal generally have to offer a reasonable price, as the personal representative or trustee has a fiduciary duty to all beneficiaries to optimize the value of key estate resources.
Utilizing creative estate planning solutions can help people strengthen their documents and protect their loved ones. The right of first refusal is one way to make decisions regarding real property as fair as possible.The post How the right of first refusal strengthens an estate plan first appeared on Scott + Hespen Law, PLLC.
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