Concepts in the FairSplit web app
What is the difference between an inventory and a division?
An inventory is a list of items. You can add photos to it and valuate the assets on the inventory.
You can stop at the inventory, or go ahead and make it into a division.
A division is when you use Fairsplit division rounds to divide inventoried assets among the beneficiaries. We call them divisees.
What are the main concepts of a FairSplit inventory?
A property is a realty such as a house or condo. Each property contains rooms and assets.
A room belongs to a property and may contain assets and files, including photos.
Assets may (optionally) belong to a property, to a room and to a category. An individual asset may also have photos and other files associated with it. But this is all optional: an asset may also be simply a name. Assets are sometimes referred to as items.
Market value and emotional value
What is MV (Market Value)?
Market value is the approximate real world value of an item if sold through an estate sale or auction, Craig’s List, yard sale, etc. This division process will result in each party receiving their share of the MV, and sometimes paying or receiving offsetting cash to balance differences.
For all to feel good about the division, all parties need to agree that the items listed and values are fair. There are a few ways to set the monetary value of assets; FairSplit uses AI to propose values, and the result is good enough for most, but not all, assets listed.
Agreeing on a value isn’t always possible with the initial listing. An Administrator may choose to adjust a few values based on feedback or get an appraisal (if items of significant value).
One may also remove items where values are in dispute to be separately divided in a later round through a bidding process among the participants to establish a true “market value” for the participants. This allows the other items to be divided in faster ways, thereby not holding up the process.
Note:
- The initial AR round helps confirm the values.
- Actual cash value in an estate is significantly less, due to estate sales company, consignment or auction fees. We usually recommended discounting market values to .50 to determine fair cash values between family members if reconciling to balance.
- Things are most often worth much, much less than people think. Examples of this can be particularly shocking for antiques, high quality dark furniture, silver, china, art and collectibles.
- Sometimes families decide to just ignore the monetary value if not significant, and not show or use values during the division.
What is EV (Emotional Value)?
For some participants, assets on the list to be divided hold emotional ties, or value; Dad’s old guitar, Mom’s silver brush, a watercolor from a class taken together. Some items may be easy to agree to get pre-assigned to one party or another, but others need a way to fairly assign.
Our Emotional Value Bidding round makes it possible for all to have an equally fair chance at winning such items, through bidding emotional value points on items.
What to expect in division rounds?
Rounds are different methods for dividing items among parties.
After following all the steps to set up an inventory on FairSplit, you can start the division rounds. A normal division is composed of three rounds, but in special cases more rounds can be added.
An administrator sets up a round, divisees bid on it, and then the items are distributed.
A new round starts in the pending state. A pending round can be edited by administrators.
An active round is in the bidding stage. Divisees must interact with the active round until the bidding end time set by the administrator. If all divisees finish early and indicate they are done, the round may end earlier.
When the time for bidding is past, it becomes a closed round. Divisees can no longer bid and the system divides the assets among the divisees, using its own patented method. In just a couple minutes the proposed distribution is available.
What to expect from the AR round?
The Asset Review round is recommended as the first one. It does not assign assets to people. It only asks them what assets they are interested in – without showing this information to the others.
When this first round is finished, FairSplit generates a list of assets nobody is interested in and shares it with the family; work can start early on selling or donating these, saving time and storage costs.
The Asset Review round also allows people to detect any problems with the way assets have been listed, before the actual division starts.
What to expect from the EV round?
The Emotional Value round usually follows the AR round. Each beneficiary gets a number of credits (for instance, 500) to distribute on a few assets which they care about most (the maximum number of assets is usually 7).
When this round is done, each person usually has what's dearest to them, and if not, at least they understand the division was done through a fair, neutral process, and they feel they had a fair shot.
What to expect from the SO round?
The Selection Order round is the final one. It is based on ordering a list of assets by preference.
Divisees must put the most wanted item on the top of their list, the second most wanted on the second position, and so on.
Then a distribution program assigns assets to divisees in turns, according to their lists of preferences. The program only takes a second to complete the division, but the result of this process is the same as if people had taken turns choosing one asset each turn.
What is the FairSplit Survey of Estate Division?
FairSplit Survey of Estate Division are five questions that we use to understand the goals, preferences and concerns of each divisee.
This aims to keep all parties confident in the system, by knowing their wishes so they can be honored and valued equally with those of the Administrator and other participants.
What types of changes are affected by my answers?
As one example, if every participant is interested in a rapid division, and has no EV (Emotional Values) attached to items, the administrator can provide the fastest method in the fewest rounds.
If there is emotional value from any of the parties for certain assets, an Emotional Value round should be done to address that.
Why is there an “I agree to abide by the results” statement?
This is for divisees to understand and verify their willingness to consciously commit to the fair and equitable division the FairSplit’s process provides.
Can immaterial things be divided?
Definitely! Anything that needs to be fairly allocated can be divided:
- For example, “vacation week dates” at a family beach house can be entered as items.
- Vacation dates and holidays in a divorced family can be listed.
- Tasks that need to be done.
If dividing cash, consider putting it into smaller blocks so it can be chosen as equivalent to objects. For example, $10,000 can be entered in four $2,500 blocks.