Answer :
Answer: To divide the estate using the sealed bids method, we follow these steps:
Determine the total value of the estate according to each sibling:
Edgar's total value:
250
,
000
(
)
+
100
,
000
(
)
=
350
,
000
250,000(House)+100,000(Land)=350,000
Katy's total value:
180
,
000
(
)
+
170
,
000
(
)
=
350
,
000
180,000(House)+170,000(Land)=350,000
Calculate each sibling's fair share of the estate:
Fair share for Edgar:
350
,
000
2
=
175
,
000
2
350,000
=175,000
Fair share for Katy:
350
,
000
2
=
175
,
000
2
350,000
=175,000
Determine the allocation of the assets:
Suppose the assets are allocated as follows:
House goes to Edgar.
Land goes to Katy.
Calculate the value of the assets each sibling receives:
Value received by Edgar:
250
,
000
250,000
Value received by Katy:
170
,
000
170,000
Determine if any payments need to be made to equalize the shares:
Since Edgar receives the house valued at
250
,
000
250,000, which is more than his fair share (
175
,
000
175,000), he must pay the estate the difference:
250
,
000
−
175
,
000
=
75
,
000
250,000−175,000=75,000.
Since Katy receives the land valued at
170
,
000
170,000, which is less than her fair share (
175
,
000
175,000), she must receive a payment from the estate to equalize her share:
175
,
000
−
170
,
000
=
5
,
000
175,000−170,000=5,000.
Calculate the surplus share for each sibling:
The surplus (or excess payment to/from the estate) can be found by summing the total payments and dividing it equally.
Total payment made to the estate by Edgar:
75
,
000
75,000
Total payment received from the estate by Katy:
5
,
000
5,000
Since Edgar paid
75
,
000
75,000 to the estate and Katy received
5
,
000
5,000 from the estate, the surplus to be divided is:
75
,
000
+
5
,
000
=
80
,
000
75,000+5,000=80,000
Each sibling gets an equal share of the surplus:
80
,
000
2
=
40
,
000
2
80,000
=40,000
Thus, the surplus share for each sibling is:
Edgar's surplus share:
40
,
000
40,000
Katy's surplus share:
40
,
000
40,000
Therefore, the surplus share for each person is
40
,
000
40,000.
