How do I add instructions in my will to allow a beneficiary to take over a property by giving up other assets?
If you are leaving a property to more than one beneficiary, you can include instructions in your Will to provide flexibility for one beneficiary to take over the entire property, subject to the agreement of the other beneficiaries.
This can be useful where, for example, you leave your residential property equally to your two children. After your death, one child may wish to keep the property while the other would prefer to receive other assets from your estate instead. Rather than requiring the property to be sold and the proceeds divided, you may wish to allow your child who wants to keep the property to exchange part or all of their entitlement to other assets in your estate for a larger share of the property.
How does this work?
For example, suppose your entire estate is a property worth $1M and liquid cash worth $1.5M. Your estate is to be divided equally to your two children, giving each child a 50% share. After your death, your first child wishes to take over the entire property, while your second child is happy to receive other assets from your estate instead. So the first child would get the $1M property + $250k cash, while the other child gets $1.25k cash.
What if the other assets are not enough?
There may be situations where the beneficiary's entitlement to other assets is not sufficient to compensate the other beneficiaries for the additional share of the property. In such circumstances, the beneficiary taking over the property may need to make up the difference using cash or another method agreed upon by the affected beneficiaries.
What if the beneficiaries do not agree?
For valuation, you can dictate this to be decided by the Executor(s), who may seek professional valuation if necessary. You can also add in a timeline whereby if the beneficiaries are not in agreement, the property shall be liquidated.
To do so, under "Additional Instructions" within the asset, key in the following:
Any beneficiary entitled to an allocated share of this {property type} in this Will may, with the unanimous agreement of all other beneficiaries who are also entitled to a share of this {property type}, take over full ownership of this {property type} by exchanging part or all of their entitlement to other assets in my estate in return for an increased share of this {property type}. If the beneficiary’s entitlement to other assets is insufficient to match the value of the additional shares in this {property type}, the beneficiary must compensate for the shortfall either in cash or through a method agreed upon by all affected beneficiaries.
My Executor(s) shall facilitate such exchange as part of the estate administration before the final distribution, ensuring fairness and equity. The fair market value of this {property type} shall be determined by my Executor(s), who may seek professional valuation if necessary. If no unanimous agreement is reached within 12 months from the time of my demise, I direct my Executor(s) to liquidate this {property type} and distribute the net proceeds according to the allocation stated below.
