Individuals with valuable property may not leave those assets directly to specific beneficiaries. Doing so could create an imbalanced and unfair estate plan. Instead, they may order the liquidation of real property or business holdings while extending the right of first refusal to certain beneficiaries.
Those who may inherit from an estate could have the option of acquiring assets from the estate at a fair market value before the sale of those assets to outside parties. Beneficiaries may need to act promptly in scenarios where personal representatives fail to uphold a right of first refusal and instead arrange for the sale of resources to a third party.
The courts can prevent inappropriate transactions
A personal representative administering an estate that includes the right of first refusal should communicate with beneficiaries. They generally need to provide an opportunity to make a fair market offer to acquire estate resources before they offer them for sale to any interested party.
In some cases, personal representatives may simply misunderstand their responsibilities. Other times, they may potentially see an opportunity to enrich themselves by selling assets to someone they know or arranging for a kickback.
Those denied an opportunity to acquire assets from an estate when documents provide them with the right of first refusal can theoretically take action in probate court. They can ask a judge to prevent the transaction, reverse the transaction or hold the personal representative accountable for failing to follow the instructions included in the documents.
Monitoring estate administration can help beneficiaries assert themselves when personal representatives or trustees do not respect their rights. Wealth transfer disputes regarding the right of first refusal frequently require the intervention of the probate courts.