How to Divide Estate Assets Among Beneficiaries

Ask MoneySense

We are three beneficiaries of our parents’ estate. The assets include five properties, five cars, multiple bank accounts and various investment accounts. Our parents asked that everything be divided equally among the three of us.

In practice, equal division is complicated because each asset has a different value, and we have different preferences about what to keep, what to sell and on what timeline.

How can the estate be divided fairly?

Right now, our names appear on the properties and accounts—each of us is the primary owner on some assets and successor or co-owner on others—so eventual sales or distributions could create conflicts.

Would placing everything into a trust help? If assets are sold, how can the proceeds be split equally?

—Lisa

How to split an estate among multiple beneficiaries

Lisa, there are several legal and practical considerations when multiple people inherit a mix of real estate, vehicles, bank and investment accounts. I’ll walk through the main options and trade-offs so you can decide what makes the most sense for your family.

First, wills and estate documents commonly give the executor or trustees broad discretion to sell or convert assets to cash, and to delay sales if market conditions make an immediate sale unwise. That discretion exists precisely because selling certain assets—like rental buildings or seasonal cottages—right away may not be in the estate’s best interests.

An estate trustee also typically has the authority to allocate specific assets to beneficiaries as part of their share. For example, if one sibling wants a particular property, they can receive that property and accept a correspondingly smaller share of the remaining estate in cash. If the property’s value exceeds their share, they can make a cash payment (a buyout) to the other beneficiaries to balance the division.

However, from your description it sounds like the estate has already been transferred into the three of your names. If that’s the case, you legally own those assets and can agree among yourselves how to proceed—though the best outcome is to formalize any agreement so future disagreements are minimized.

Should you sell inherited assets or keep them jointly?

Often the simplest and cleanest solution is to sell the assets and divide the net proceeds (after taxes, fees and expenses). Liquidating investments and real estate removes ongoing management responsibilities and the potential for future disputes.

That said, families sometimes keep a property for sentimental reasons—such as a cottage—or because a rental property generates steady income. If you plan to keep one or more properties, you’ll need clear rules about ownership shares, income distribution, expense contributions and exit strategies.

There’s generally no tax advantage to keeping property jointly solely to avoid taxes: in many jurisdictions tax consequences are triggered at the death of the second spouse or when a property is sold. Consult a tax professional for specifics on capital gains and other liabilities for your situation.

Joint tenants vs tenants in common: which is right?

If you and your siblings decide to hold property together, you can choose joint tenancy with right of survivorship or tenancy in common. Joint tenancy means the surviving co-owners automatically inherit the deceased owner’s share. That arrangement is less common among siblings because it removes flexibility to leave your share to a spouse or children later on.

Tenancy in common allows each owner to hold a specific percentage of the property and to direct where their share goes when they die. This is typically the preferred option for siblings who want future control and the ability to pass their share to their own heirs.

In either case, use a written co-ownership agreement. That document should cover: how decisions are made; how maintenance, taxes and renovations are funded; what happens if one owner wants to sell; and procedures for buyouts or forced sales. A co-ownership agreement is usually a one-time legal expense and can prevent costly disputes down the road.

While a trust can hold assets for co-owners, trusts add setup and ongoing legal and accounting costs. Unless there is a compelling reason—such as protecting assets for minor children or managing complex tax situations—a trust may be more costly than helpful.

Account ownership: successor holders and joint accounts

You noted investment accounts with one person named as primary owner and others as successor holders. Be aware that some account types (for example, tax-advantaged accounts) have specific rules about successor holders and beneficiaries. In many cases non-spouse successors are not permitted in the same way a spouse is, and some accounts are effectively joint, which complicates cost-basis tracking and tax reporting.

Joint investment accounts can create headaches around capital gains, withdrawals and differing risk tolerances. For investment accounts in particular, it is often cleaner to liquidate and distribute cash so each sibling can manage their portion independently.

Practical steps to reach a fair division

1. Inventory and valuation: create a complete inventory of assets and get current market valuations for real estate, vehicles and investment accounts so everyone knows total estate value.

2. Decide priorities: each sibling should list assets they most want to keep and assets they prefer liquidated. Try to match preferences so fewer buyouts are required.

3. Consider selling vs keeping: selling and splitting proceeds is the simplest. If you keep assets, document ownership percentages, income allocation and exit rules.

4. Use buyouts to balance values: when one person takes an asset worth more than their share, they can pay the others the difference so everyone receives an equivalent value.

5. Formal agreements: sign a co-ownership agreement for any jointly held assets, and update wills and beneficiary designations so future estate plans don’t unintentionally affect one another.

6. Get professional advice: consult an estate lawyer and a tax professional to ensure compliance with local laws, understand tax consequences and draft clear agreements.