{"id":1148,"date":"2025-07-08T20:06:02","date_gmt":"2025-07-08T20:06:02","guid":{"rendered":"https:\/\/palleylawoffice.com\/?p=1148"},"modified":"2026-06-06T19:21:19","modified_gmt":"2026-06-06T19:21:19","slug":"avoid-a-devalued-estate","status":"publish","type":"post","link":"https:\/\/palleylawoffice.com\/ar\/avoid-a-devalued-estate\/","title":{"rendered":"\u062e\u0635\u0645 \u0627\u0644\u062a\u0642\u064a\u064a\u0645: \u0643\u064a\u0641\u064a\u0629 \u062a\u062c\u0646\u0628\u0647 \u0641\u064a \u062e\u0637\u062a\u0643 \u0627\u0644\u0639\u0642\u0627\u0631\u064a\u0629"},"content":{"rendered":"\n

When a will includes multiple pieces of real estate\u2014especially commercial properties\u2014dividing those assets among several beneficiaries can create unintended financial consequences. One of the most overlooked risks is the valuation discount that occurs when beneficiaries inherit partial interests<\/strong> in real estate. This is particularly true for commercial properties, where the sale of a minority or fractional interest often triggers a discounted appraisal<\/strong>.<\/p>\n\n\n\n

Understanding how and why this happens\u2014and planning accordingly\u2014can help preserve the full value of your estate and prevent conflicts among heirs.<\/p>\n\n\n\n

As with all content on this website, this article is informational in nature, and is not to be relied upon as legal advice. Consult with an attorney<\/a> for counsel specific to your circumstances. Palley Law provides prospective clients an initial consultation at no charge.<\/p>\n\n\n\n

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The Problem with Partial Interests<\/strong><\/h2>\n\n\n\n

When a person dies owning a commercial property and leaves it equally to three children, for example, each child inherits a one-third interest. On paper, this might seem fair. But in the real world, that fractional ownership may be worth significantly less<\/strong> than one-third of the property\u2019s total value.<\/p>\n\n\n\n

Why? Because a one-third share in a commercial building isn\u2019t easily sold on the open market. It offers no control over the property\u2019s operations and comes with limited liquidity. As a result, appraisers apply what\u2019s called a valuation discount<\/strong>\u2014often for lack of control and lack of marketability. Depending on the property, these discounts can range from 10% to 40%, substantially reducing the value of what each heir receives.<\/p>\n\n\n\n

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Real-World Example: The Family Retail Plaza<\/strong><\/h2>\n\n\n\n

Consider a real-world-style scenario: a man owns a small retail plaza that generates monthly rental income. In his will, he leaves the property equally to his three adult children. The plaza is appraised at $1.5 million. However, each one-third share is valued at only $300,000 instead of $500,000 due to the valuation discount applied for lack of control and marketability.<\/p>\n\n\n\n

Now the estate shows $900,000 in value rather than $1.5 million on paper. This not only reduces the apparent size of the estate for estate tax<\/a> purposes (which may be a benefit in some cases) but also leaves the heirs with illiquid, discounted assets that are difficult to use, sell, or manage.<\/p>\n\n\n\n

What could have been a straightforward inheritance has now become a source of frustration\u2014and financial loss.<\/p>\n\n\n\n

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Solution 1: Direct the Sale of Real Estate in the Will<\/strong><\/h2>\n\n\n\n

One of the simplest ways to avoid this problem is to direct your executor to sell the real estate<\/strong> and divide the proceeds among your beneficiaries. By doing this, you ensure that:<\/p>\n\n\n\n