Fair way of dividing assets / drawing straws
December 13, 2017 8:43 AM   Subscribe

I need to divide estate assets between 3 siblings who will not agree on anything.

I've considered various complicated solutions like using a spreadsheet or other app to try to come up with fair allocations as determined by dollar value, but the siblings do not agree on the value of the goods (nobody agrees on even appraised items). So, I've been thinking we should simply put the assets on a list, draw straws for who gets first pick, and move through the list with each person picking.

The problem with that approach is that the assets are very "lumpy" in value, with maybe 2 very valuable items and everything else less valuable relatively speaking (like the first two things are each worth 5x the third thing) so whoever gets the first or second pick will be way ahead in terms of value. I've been thinking perhaps a way to make this fairer would be to have the "pick" sequence go 1-2-3-3-2-1, etc., so that 3 gets two picks of the somewhat better items.

Does this make sense? Is there a better way to do this? Simple is best, because of total disagreement on everything. My thought is that we would agree on the system of picking before anybody knows if they are 1 or 3.
posted by Mid to Work & Money (47 answers total) 2 users marked this as a favorite
Is selling stuff and dividing up the money evenly an option? Does anyone actually want the items or do they want the monetary value of the items?

If anyone wants the item they need to buy the other two out. This can happen on an item-by-item basis.
posted by brainmouse at 8:49 AM on December 13, 2017 [6 favorites]

Response by poster: I should have mentioned - it is better to distribute items rather than selling and distributing cash. Also, buying each other out is a mess because they don't agree on the values.
posted by Mid at 8:50 AM on December 13, 2017

Futility Closet dealt with this just a couple of weeks ago. It involves dividing up the entire body of assets into three, which could possibly avoid the lumpiness problem.
posted by ejs at 8:51 AM on December 13, 2017 [5 favorites]

Easiest: Sell everything and evenly distribute the proceeds (all transactions handled by a third party)

More complicated: Mediation with 2 third parties. One party evaluates assets value but not distribution, while 2nd third party allocates distribution, but not value of assets. Both operate independently of each other, and the results are combined to produce a result a fair allocation.
posted by larthegreat at 8:51 AM on December 13, 2017 [2 favorites]

How many assets are you looking at?

Can all the assets be sold at auction/estate sale and then the profits divided evenly?

You can also assign values to the assets - some are a low-value and some are high-value. If a sibling chooses a high value item on their pick, they forfeit their next pick. Or everyone gets to pick 2 items per turn, but if they pick a high-value, it counts as their whole turn.

The pick sequence you indicate is is how we draft our fantasy football team (called a snake draft). I don't know if it's fairer (seems to be), but it's definitely a thing.
posted by hydra77 at 8:51 AM on December 13, 2017 [1 favorite]

What about a bidding war with fake money?

Everyone starts out with 1000 monopoly dollars. Each item is auctioned (just between the three siblings); if someone wants it, they’ll bid up for it. If they want something, they’ll save up for it. The winning bidder for that auction ‘buys’ that item with the monopoly dollars, which means they have less left over for other items.

Everyone starts out with the same amount of dollars and has an equal chance of obtaining something.
posted by suedehead at 8:51 AM on December 13, 2017 [17 favorites]

Response by poster: They hate each other, so anything that requires them to be in the same room together is not likely to work. Sorry to threadsit.
posted by Mid at 8:54 AM on December 13, 2017 [1 favorite]

Does anyone have a sentimental attachment to any of the smaller items involved? Could each person make a ranked list of the smaller items to which they feel personally sentimentally attached, so that - where overlap occurs - the person with highest ranked sentimental value would get the item? If not, I do agree that drawing straws for the smaller items makes the most sense.

For the large items, does anyone have a greater practical need that can be agreed upon? Like, if one of the 2 big things is a house, and 2 of the 3 people involved are already home-owners, could it be agreed that the person who does not own a home gets the home and the other two divide the rest between them? If not, I think selling these 2 larger-ticket items may be your best course of action, as sub-optimal as it might be.

Good luck, this sounds stressful, and assuming the estate is being divided after a familial loss, my condolences. Dealing with this stuff after losing a family member (whether a loving or fraught relationship) is incredibly difficult.
posted by pammeke at 9:02 AM on December 13, 2017 [1 favorite]

If there were two people I'd suggest one person split the items into two groups, and the other person gets first pick of which group of items they have. Like the Person A cuts the cake in half, Person B picks a slice thing, where it's in A's best interest to make two equally good groups (because they don't know which one they're going to get).
I'm not sure if there's a version of this with three people, however. Hmm, how about:
A divides the items into three groups.
B picks a group.
C re-divides the remaining items into two groups.
A picks a group.
C gets the remaining group.

It's in A's interest to create three equal groups so B doesn't get an "unfair share", and so that all the stuff they value isn't left in one group for B to take. Same for C - they have to divide stuff equally because they don't know which group they'll get.

The only issue is the random allocation of A/B/C roles, in theory(?) they are all fair but there may be the perception that e.g. B has the best role (picking from three groups).
posted by EndsOfInvention at 9:04 AM on December 13, 2017 [3 favorites]

As the executor, at a certain point, you can just unilaterally make decisions to a certain extent, no? I am an heir in a similar situation, and I have certainly had moments where I wish the executor (who thank GODDDDD is not one of the heirs) would just cut to the chase instead of trying to weigh our feelings to a nicety.

Of course, I have also already decided that nothing in the estate is worth the pain of having the fight, so I've bowed out of inheriting any of the land. The remaining assets that still have to be divided might (?) be less contentious and I am trying really hard not to make it harder for the executor. If the heirs are not making it easier for you I am really sorry.

I think anything you have on paper as far as appraised value is important here - stick to the letter of the appraisal, divide accordingly, maybe have the biggest items be a buyout situation. But it sounds like whatever happens someone (everyone?) will be unhappy, and it's unfortunately your job to make the decisions.
posted by Lawn Beaver at 9:04 AM on December 13, 2017 [1 favorite]

if folks are gonna be jerks, and can't even be in the same room with eachother, how much time and emotional energy do you really want to invest in this ? (assuming you are both the executor/trix of the estate and a blood relative).

If they already so estranged they can't be in the same room, then I don't see any outcome from the distribution as having a net-positive. The best you can hope is status-quo of hatred, and I wouldn't have high hopes of even that. Chances are far higher you'll get pulled into the mud with them. Who wants that ?

Hire some 3rd party to do it, pay them from the estate, and have everyone sign some "if you sue, you lose everything and get nothing", possibly with the nice Willy Wonka GIF attached.
posted by k5.user at 9:06 AM on December 13, 2017 [21 favorites]

You could divide the loot into 3 piles by them choosing sequentially. Then randomly assign 1,2,3. #1 gets to choose the pile of his choice.

This is similar to the pie splitting technique: I split the pie, you choose your piece.
posted by H21 at 9:10 AM on December 13, 2017 [1 favorite]

Would they agree to having everything appraised by 2 appraisers and all of the values assessed are in the middle of the 2 appraisers' appraisals?

And if someone wants to dispute both appraisals, they need to pay for a 3rd appraisal themselves.
posted by k8t at 9:14 AM on December 13, 2017 [3 favorites]

I would tell each person that they should come up with a value for each item on the list. Then you ask each what they would want. You can then allocate them so that each person gets approximately the same value (using only their assigned values) and also things that are on their list of wants.

per . 1 . . 2 . . 3
a . . 50 . 100 . 10
b . . 100 50 .. 100
c . . 25 . 25 .. 50
d . . 75 . 10 .. 100
e . . 50 . 30 .. 20
f . . 60 . 50 . . 40

so you can set it up that person 2 gets item a and f (150 value from them) person 3 gets item d and c (150 value from them) and person 1 gets item b and e (150 value from them) Of course it would be more difficult with more items and different values, but there would be some iterative method where it could work out. It would also allow for people to value higher things that they actually value more hopefully accounting for what they also would actually want.
posted by koolkat at 9:15 AM on December 13, 2017 [2 favorites]

If the items are mostly evenly valued except two, then can you sell those two and then just go through picking 1-2-3? I would sneaking justify this with an email (or other written communication) asking each of them individually "will you be satisfied with the distribution if Other1 and Other2 and up with those two items?" Assuming each of them says no, then you have no other option but to avoid giving them out really.
posted by the agents of KAOS at 9:20 AM on December 13, 2017

Auction sounds fine, just do it via email.
posted by Slinga at 9:21 AM on December 13, 2017 [1 favorite]

Since everyone values the items differently, then auction them via email/online silent auction. The "winner" of each item essentially buys out the loser's share. This method is discussed with regards to divorce proceedings here.
posted by muddgirl at 9:26 AM on December 13, 2017 [7 favorites]

Do they agree on the relative value of the things? That is, does everyone agree there are two very valuable items and then it diminishes quickly from there? And how many things are you talking about? Like ten or like 50? Because if it's more like ten I'd just do a variant of the three piles with loose assortment being

Pile one - valuable item one & two least valuable items
Pile two - valuable item two and two second least valuable objects
Pile three - everything else

Everyone can negotiate around the least valuable objects (in case someone has a sentimental feeling about it) but the object will be to get things to people, not deal with absolute financial fairness.
posted by jessamyn at 9:28 AM on December 13, 2017 [1 favorite]

You could do this with a shared spreadsheet, drawing straws for who goes first, second, third. Then just go in turns claiming items.
posted by fingersandtoes at 9:31 AM on December 13, 2017

When dividing up the physical aspects of my grandmother's estate, my dad and his siblings got out 4 different colors of stickers. They then went room by room and put a colored sticker on one item within the room one at a time.

After the entire house was stickered, they then put the colored stickers on four pieces of paper and drew them out of a box. Aunt got red, even though she placed all the blue dots. Dad got blue yet assigned the yellow dots, Uncle 1 got yellow and laid out the red dots, and Uncle 2 got stupidly lucky and got the green dots he assigned. Because they all knew the odds were not with them to get the dots they assigned, they were pretty fair about how things got distributed. It made for some odd divisions like the piano went to the blue group and the piano stool was red, but after a bit of horse trading, everyone got what mostly what they wanted. They actually did the same with the land and drew up 3 equal parcels and one slightly smaller parcel that contained the house and drew lots for them.

It wasn't perfect and it was time consuming, but it forced people to behave a bit.
posted by teleri025 at 9:32 AM on December 13, 2017 [3 favorites]

You don't need to bid in person. Draw up a spreadsheet of all the items, and have them fill out points (out of an overall budget) that they're willing to spend on each item. The person who values the item most gets it. I can't think of a more conflict free way to do this.
posted by danny the boy at 9:46 AM on December 13, 2017 [2 favorites]

Anything that gets zero points by everyone is sold and proceeds divided. Or discarded, or assigned by you. The effort here is you cataloging the estate into a spreadsheet, but it sounds like you'd have to do that anyway.
posted by danny the boy at 9:49 AM on December 13, 2017 [1 favorite]

Response by poster: Do you auction item-by-item or do it all at once? And can they see each other's bids?
posted by Mid at 9:55 AM on December 13, 2017

Response by poster: I'm worried they will play around and mess with each other by changing their bids at the last minute and then complaining they got tricked.
posted by Mid at 9:56 AM on December 13, 2017

Public auction of absolutely everything in the estate (with or without the house), whereby the three people are bidding not only against each other, but against whoever shows up. At the conclusion, all proceeds are split three ways. This approach is how Mennonite families deal with it. It combines an empirical determination of value for each item with the ability of each individual to figure out what it's "worth" to him/her.
posted by carmicha at 9:56 AM on December 13, 2017 [20 favorites]

This video shows you how to divide a cake fairly between 3 people. Might be applicable to this situation.
posted by adamrice at 9:58 AM on December 13, 2017 [3 favorites]

Regarding the spreadsheet/points budget idea, prepare for bad feelings if either a) someone bullets all of their points onto one/two items or b) someone gets more objects because they spread their points around everywhere.
posted by carmicha at 10:00 AM on December 13, 2017

Are you one of the three? Are you the executor? If you're either, any suggestion may be rejected by them for bias. And I'm really sorry you're having to deal with this.

carmicha's auction suggestion sounds the fairest, but might assume good intentions from all parties.
posted by scruss at 10:09 AM on December 13, 2017

It's not a live auction, and they're not really "bids" as popularly understood. Everyone submits a single list, once. You send back a compiled sheet with all three siblings' scores on it, highlighting the winner of each item.

They can't claim unfairness because they all started out with the same information and resources (points). The only factor about who gets what is entirely in their control: how much they value any particular item. Everything is transparent, they can see what everyone else "bid".
posted by danny the boy at 10:09 AM on December 13, 2017 [1 favorite]

And I would probably avoid using terms like auction and bid, as it may cause confusion and further drama.

And yeah it sounds like there will be drama no matter what you do, but at least this lets you continue being a dispassionate party, where you are not personally deciding anything. Just administering.
posted by danny the boy at 10:15 AM on December 13, 2017 [1 favorite]

Sorry for the flurry of messages, but I do want to point out downsides of this method: it's possible that one person will end up with an "unfair" amount of items and be seen as the "winner", and it's possible someone will end up with NO items. But... that's how auctions work.
posted by danny the boy at 10:19 AM on December 13, 2017 [1 favorite]

And you have to account for ties, which could be more or less likely depending on both the amount of points in the pool and how many items there are on the list. May take some experimentation on your part to find the right number of points.

For ties you could give the option to sell and divide proceeds, randomly assign winners, or if there are many ties, a second auction.
posted by danny the boy at 10:25 AM on December 13, 2017 [1 favorite]

Assuming you're executor & empowered to force a decision, I'd offer two options: (1) if they really can't set aside rancor and be in the same room, have an estate outfit sell everything (no holdouts) and devide the proceeds; or, (2) have pbviously valuableitems appraised and if they are willing, use the 1-2-3-3-2-1 selection, with selection order established by age or randomly, like dice or high card
posted by Pressed Rat at 11:03 AM on December 13, 2017

posted by jeffamaphone at 11:21 AM on December 13, 2017

In an equitable distribution auction, the person who ends up with fewer items or with the lowest-value items gets paid straight up cash by the other two people, based on how highly the other participants valued their items. That's the part that makes it equitable.
posted by muddgirl at 11:30 AM on December 13, 2017 [1 favorite]

I like the fake money/points silent "auction", where everyone allocates their 100 points to items in the estate. If you want to see it work in practice, take a look at articles discussing "auction" style fantasy football drafts, which try and resolve the same issue here: some players are much more valuable than others, and you need a way to distribute the "lumpy" assets. The other option you mention, a pick order of 1, 2, 3, 3, 2, 1, 1, 2, 3, 3 is called a "snake" draft in fantasy football, and though I like it for large groups, I don't like that here (or any other random straw-drawing option) because with the two big, important assets, one beneficiary is going to feel like they were screwed.

The auction approach allows everyone to quantify how much they want a particular item. If sibling A really wants Big Item $X, A can bid 100 points on $X. A then doesn't get anything else out of the estate, but A then guarantees they get item $X. You could either do it as a one-time "silent" submission where each sibling submits the bids in advance, or auction off things item-by-item. To continue borrowing from fantasy football, in the live draft option, the siblings would take turns nominating what item is up for bid, and they would know what each other is bidding. If the first item up is one of the important items, and Sibling A buys it for 80 points, then Sibling A's point "bank" is drawn down to 20 points when the next item comes up, and A can only bid up to 20 points on anything else.
posted by craven_morhead at 11:34 AM on December 13, 2017 [1 favorite]

They could treat it as picking teams, with each person taking turns to claim an individual item, and at the end they could trade.

If they can't be in the same room to do this, someone could catalog the total collection of items and list them in a spreadsheet, then manage the turn-taking remotely (conference call, group text chat, or via email), with each person in their own location. The manager could post a shared spreadsheet, marking off items as they are picked and record the pick # per person. I'm envisioning the spreadsheet structured like this:

item # | item name/description | sibling 1 | sib 2 | sib 3

Items should then be referred to by number for consistency and accuracy (avoiding someone saying "I meant the blue chair, not the blue-green chair!"), and struck out once picked. In the sibling field, the # of pick could be listed, to ensure everyone got the same number of turns.

If the siblings fight over going first, second or third, roll a die for the first time, then cycle through turns like this:
1, 2, 3;
2, 3, 1;
3, 1, 2;
And continue the pattern, or flip the order, or keep jumbling the order, depending on how much they fight about order.

Also, assigning a financial value to items is pointless if the parties can't agree on values now, because that can still dispute the appraisal values, and more importantly, personal values are not purely financial. Maybe one person has a strong memory of the item, while the others don't. Or one person finds the item to be attractive and interesting, while the others don't care about it more than something to sell.

Value is assigned by the individuals through their own prioritization of what they want. There's only so much gaming of that system, compared to everyone assigning points.
posted by filthy light thief at 11:38 AM on December 13, 2017

1st 2 items have more value. 3 person gets to pick 2 or even 3 to match the rough value. Then each picks in turn. Or any fair method above that is manageable. If they will not agree, tell them it would have to go to court, will cost a ton of money, and they should keep that in mind. They either agree or accept a huge financial hit.
posted by theora55 at 11:57 AM on December 13, 2017

Just adding on to the proposal (koolkat, danny the boy) to have them each allocate points across the items - what you ideally want to set up would be called maximin - i.e., maximize the minimum sum of each person's points for the things they get.

Just giving individual items to the person with the highest value for that item *does* run into some problems regarding the overall fair allocation, and yes, someone could totally lose out because they distributed their points more evenly. (Imagine that Sibling A values everything equally, Sibling B values only even-numbered items, and Sibling C values only odd-numbered items. Sibling A gets nothing.) But if you allocate by maximin, as long as people don't have strong higher-order preferences (like wanting to end up with one of each type of thing), they are genuinely motivated to provide their true values.

The great thing about the siblings placing different values on the items is that they will each, demonstrably, by their own judgment, get more than 1/3 of the total value.
posted by cogitron at 1:36 PM on December 13, 2017 [3 favorites]

How about you go through the items one by one. Each sibling gets to vote on the following basis: if not you, which of your siblings would you prefer to get this item?
So if siblings 1 and 2 vote to give the first item to sibling 3, he gets it.
If theres a draw because they all manage to vote for someone different, then the item gets put to one side and voted on again later.
If anyone tries to break the system by not voting or voting for themself, you just toss a coin.

You then move onto the second item, again all 3 get to vote: if not you, which of your siblings would you prefer to get this item? but this time they are voting with the knowledge that sibling 3 got the first item. So siblings 1 and 2 will probably vote for each other and sibling 3 has to choose who gets item#2.
So you repeat that until all the items are covered and then repeat for any items where there was a draw the first time around. As they win or lose different rounds they are likely to change their minds about who is more deserving of different items.
This could all be done via email.

In your list of items, you probably don't want the most valuable items right at the beginning or at the end.

The reason I like this method is that it forces them to focus on what they are giving away rather than thinking they are getting items due to random luck of the draw or some financial advantage a sibling had over them.
posted by Lanark at 1:39 PM on December 13, 2017

Danny the boy's got it, I think. A sealed-bid auction of some sort. It might be worth thinking about doing it in two rounds with the two valuable items first -- everybody gets 1000 points, we're bidding on the piano and the car first, and then we're doing a second auction with the remaining points once the first two have been awarded. This would mean that if A,B and C bid (say) 400/350/300 for the car and 350/450/500 for the piano respectively, then A gets the car and has 600 points left, C gets the piano and has 500 points left and B has neither the two valuable items but has 1000 points left to bid on the remaining assets. This should tend to reduce the odds that someone walks away empty handed, since they will likely get either of the valuables or be able to get much of what they want from the rest.

The other thing I can think of to reduce inequality in the end is that if there is some portion of the assets that could reasonably be sold; say 10% of the assets, you could sell them and divide the cash by the share of unspent points after the 90% have been auctioned off. So if A happens to outbid C by a bit on most of the small things they are both interested in, then at least C gets some cash. (You'd announce this in advance, of course, and people could just not put points into the auctions to increase their share of the cash). This would give you a little more flexibility to ensure a more even outcome while not selling the majority of the assets.
posted by Homeboy Trouble at 1:45 PM on December 13, 2017 [2 favorites]

Whichever option you decide on, I would tell them that they have two choices, do it the way you decided on, or you will sell the whole estate and divide by 3. You're spending too much time on this for three people who are not cooperating with the situation. And if this is a deep family feud, you could divide it the most even way in the world and they still won't be happy - so don't make yourself too crazy here, you really can't win.
posted by NoraCharles at 1:45 PM on December 13, 2017 [10 favorites]

honestly, if they're completely pigheaded I would make them draw for who goes in what order, and then rotate through that order picking things until it's all gone. Someone draws 1, someone draws 2, someone draws 3. Great, that's the order until it's all gone, go. You can only pick one thing at a time (you may have to make some decisions ahead of time tagging things to decide what things are "sets," i.e. you may decide all the silverware is one "thing," or the proverbial piano and stool must stay together. Make no attempt to assess values - they'll go for the things that matter most to them first. If they miss out on things they wanted they can decide whether to trade among themselves.
posted by randomkeystrike at 1:46 PM on December 13, 2017 [1 favorite]

Danny the boy and Muddgirl have it. There are several mathematical procedures for doing this. One is called Knaster's Procedure (or the method of sealed bids), another is called the Equitability Procedure. (Full Disclosure: The 2nd link references teaching materials that I wrote.)

The siblings do not have to agree on value and in fact SHOULD NOT disclose the value they place on any given object. Both methods are "fair" from the perspective that each sibling will receive a fair share (this has a technical definition). The Equitability Procedure has an advantage in that it is equitable (also a technical term). Both procedures satisfy a fairness criterion called Pareto-Optimal, but neither is fair from the perspective of Envy-Free (technical, but exactly what it sounds like).

If you can get secret bids for all items, the links above should illustrate how to determine who gets what/how much money. Unfortunately, I don't have any links to an applet or spreadsheet that will do this.

There is some fascinating and, dare I say, really fun mathematics that is accessible at an elementary level. In case anyone is interested in the more technical (but still mostly accessible) side, a text by Borgers is a good place to start.
posted by El_Marto at 1:49 PM on December 13, 2017 [6 favorites]

The problem with a points system is that most likely they will all bid 1000 points for the top item and then you still don't have a decision.
posted by Lanark at 1:51 PM on December 13, 2017

The problem with a points system is that most likely they will all bid 1000 points for the top item and then you still don't have a decision.

That's solved if you do a "live" auction and go item-by-item. If you tee up Expensive Item 1 and sibling A wins the bid with 99 of 100 points, Sibling A only has one point to bid with on the rest of the items.
posted by craven_morhead at 2:31 PM on December 13, 2017

Neal Stephenson has an interesting idea for how to do this in Cryptonomicon--for every item, each person places a dot for it on an X/Y graph, one axis representing emotional value and the other monetary. Once everyone has filled it out (though this assumes they don't lie, I guess) you have a baseline for what they believe they deserve and can distribute according to preference at least somewhat fairly. You'd be in a better situation than the fictional one in the book, since they wouldn't be able to see where the others were placing the items (in the book, I believe they did this in a parking lot).
posted by zinful at 3:18 PM on December 13, 2017 [1 favorite]

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