Distributing An Estate (or anything) Equitably — A Formula


When considering your estate distribution following your death, there are many strategies to take. Some of the most popular include:

This post explains another option, one that I haven’t found yet after scouring the internet. This option is to distribute an estate through a calculated equitable percentage.

Thought Process

The questions that I asked myself when distributing money were:

To accomplish this, I decided to make a formula (or more accurately, a series of formulas) to determine with an estate of X value, how would I want to distribute my funds to N number of people based on their relative wealth. I also wanted to create a system other people could use based on their own preferences.

I prioritized 2 things:

I chose not to focus on:

These topics should be explored further prior to using the formula for practical application.

The Short Version

Use the Excel spreadsheet found here to input your own amounts and see it for yourself.

Adjust the INPUTS:

Inputs: Distribution Level and Estate Value
Distribution level adjustment example

The Formula(s) — Explanation

Below are the symbols referenced in the formula(s):

Pw = Person initial Wealth
N = Number of People
D = Distribution Level
Pwavg = Average of Pw
Pwadj = Adjusted wealth based on V
Pwout = Pwadj with outliers accounted for
Proportion = the proportion of the estate each person receives
% of estate = the percent of the estate each person receives

To start, you will take the yearly salary (or whatever measure of wealth for each individual you choose) of each beneficiary, represented by Pw. I then averaged all of the Pw’s, which is represented by Pwavg.

Pwavg = {Pw/N

From there, you may want to bring everybody a little together, which is why I use the below equation to create an adjusted wealth (while also solving the issue of dividing by zero for those with no wealth). This adjusted wealth is represented by Pwadj.

This is represented by the distribution value D. The closer to one, the less distributed, and more than one the more distributed.

Pwadj=IF(Pw<Pwavg, (Pw+(Pwavg-Pw)^(1/D)),(Pw-(Pw-Pwavg)^(1/D)))

This brings all the distributions closer together.

I then look for low outliers in the Pwadj (adjusted wealth). I do this via this formula —


Pwout being the adjusted wealth after another adjustment to account for outliers.

This solves the problem of vastly overdistributing funds to people with little to no wealth. **(show example)**

From there, I take the outlier Pwout and use the following formula to get the Proportion of the estate each person should receive —

Proportion = 1/(Pwout/{Pwout)/100

Then divide each Proportion by the sum of those Proportions to get the % of estate for each individual.

% of estate = Proportion/{Proportion

Finally, take the % of estate for each person and multiply it by the total amount of the estate. And there you have it: the amount each person gets, distributed in an equitable way.

Bit of a mouthful right? If you prefer, you can just use the Excel formula found here to get it as well.



I like writing about things that interest me. I’m hoping some of it may be interesting to you as well. Keep up with me and my projects at www.kylescheer.com

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Kyle Scheer

I like writing about things that interest me. I’m hoping some of it may be interesting to you as well. Keep up with me and my projects at www.kylescheer.com