Many wills contain simple and straightforward terms regarding the distribution of property. Individuals name beneficiaries to inherit specific assets, and their personal representative secures those resources and then allocates them to the right beneficiary.
Occasionally, estate administration is more complex. A personal representative may need to sell certain assets, such as businesses or real estate holdings, and distribute proceeds among named beneficiaries. In such cases, the will may contain a clause extending the right of first refusal to one or more of the beneficiaries.
What is the right of first refusal?
In a will describing the distribution of assets, the right of first refusal typically relates to the opportunity to acquire specific estate resources by purchasing them. Instead of allowing an outside party to purchase the family business or a deceased parent’s home, people may have the option of purchasing those resources from the estate and keeping them in the family.
Generally speaking, personal representatives need to inform people who have the right of first refusal of their opportunity to acquire estate resources. They also need to honor that right by reasonably considering acquisition offers. Of course, beneficiaries hoping to buy from the estate typically need to pay the fair market value for those assets to ensure the arrangement is as fair as possible to other beneficiaries.
Personal representatives and beneficiaries may need legal guidance when estate administration involves the sale and purchase of valuable resources. The inclusion of the right terms in estate plans can protect key assets while still giving beneficiaries the right to make major financial decisions for themselves.
