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Ask Marilyn: Paying a Debt and Dividing an Inheritance
P.R. in Carnation, Washington, writes:
Marilyn: I'm hoping you can help me calculate this correctly. My three brothers and I just sold a house we inherited from my father. My youngest brother spent 500 hours renovating the home at $30 an hour. When calculating what we each owe him, do I divide by three or by four? If I divide by four, my brother obviously just keeps his share and the remaining three siblings pay him. If I divide by three, and the three of us pay him, is he getting paid twice?
Also, if we could have hired an outside worker at the same wage, would we have been better off, since we would have then definitely divided the cost by 4? Am I overthinking this?!
First, take the proceeds from the sale of the house, and pay your brother from it. (That's what you would have done with an outside worker.) Then, divide the remainder by four and give all four siblings that amount.
This is the same as hiring an outside worker at the same wage, as far as everyone's inheritance is concerned. But it was much better to give the job to your brother. It was helpful to him and didn't reduce anyone's inheritance.