In-kind distribution
An in-kind distribution transfers property itself instead of selling it and distributing cash. For owners of businesses, real estate and private investments, the term can describe how estate assets are allocated among people entitled to receive them. The property's selection and valuation can matter, especially when an estate includes a farm or a closely held business interest.
How it works
An in-kind distribution gives a recipient an asset instead of cash from its sale. In South Carolina, distributable estate assets generally go out in kind to the extent possible, unless the will indicates a contrary intention, such as granting the personal representative a power of sale.
South Carolina distributees generally have thirty days after a proposed distribution is mailed or delivered to object in writing to the kind or value of the assets they will receive. When a fiduciary satisfies a pecuniary devise in kind at federal estate tax value, South Carolina law requires assets fairly representative of appreciation or depreciation, unless the instrument provides otherwise.
Where it shows up for owners of businesses, real estate and private investments
In-kind distributions can involve farms and closely held business interests. Practitioner experience identifies property selection and valuation as sources of disagreement in these distributions.
An estate with a business interest or real estate may distribute the property itself to a recipient. Practitioners note that an early in-kind advance can be harder to correct if the asset loses value, because returning it may not cover an over-distribution.
Points that are easy to confuse
An in-kind distribution is an allocation of property itself. A distribution of sale proceeds allocates cash after property is sold.
A pecuniary devise satisfied in kind raises a distinct valuation issue under South Carolina law.
Common questions
What is an in-kind distribution?
An in-kind distribution transfers an asset itself to a recipient instead of distributing cash from a sale. Estate assets such as a farm or a closely held business interest can raise questions about which property is allocated and how it is valued.
Can a distributee object to an in-kind distribution in South Carolina?
South Carolina distributees generally have thirty days after mailing or delivery of a proposed distribution to object in writing to the kind or value of the assets they will receive.