# Silver bars

#### Jchum

##### New member
So I have five silver bars all worth $2,100 each total price that's$10,500 the money goes to an estate where the feds take out half the profit. The estate gets divvied up 35% 25% 20% 20%. One person with the 35% buys one of the bars one person with 20% buys one of the bars and one person with 20% buys three of the bars. Saying that the bars are at the same value what is the return on the purchase of the bars per person if at all

#### Otis

##### Senior Member
Please excuse me, but I need help understanding the given scenario, as you've presented it. Comments follow.

So I have five silver bars all worth $2,100 each total price that's$10,500 the money goes to an estate …
You wrote that the money goes to the estate, so the bars were sold, and the estate received $10,500 in cash. Is this correct? … the feds take out half the profit … Profit? I don't understand. Perhaps, you're thinking of something like, "The estate pays 50% (for taxes) of the$10,500 received, leaving $5,250 to be distributed amongst the heirs." … The estate gets divvied up 35% 25% 20% 20% … If$5,250 is distributed thusly, then the 35% heir receives $1,837.50 and the 25% heir receives$1,312.50 and each of the 20% heirs receive $1,050. One person with the 35% buys one of the bars one person with 20% buys one of the bars and one person with 20% buys three of the bars. Saying that the bars are at the same value … The bars? I suppose that means each heir buys some silver, and they individually pay$2,100 for each bar they buy (from wherever).

… what is the return on the purchase of the bars per person if at all
I'm not sure I understand "return on purchase". If I've followed correctly, none of the heirs inheirited enough money to cover the bars they purchase, so they would each need to use other funds to cover the cost. But they each have $2,100 in value for the$2,100 they spent, so there's no change in their pre-purchase assets. Any return (positive or negative) would occur, if they were to sell the silver.

We're thinking of different scenarios, I'm sure. Maybe you could reword your presentation; don't hesitate to provide as much extra detail as you can. Cheers :cool:

#### Jchum

##### New member
Silver

Thanks I think I'm just overthinking the math. The big problem I'm trying to solve I guess if it would have just been better to collect the money and buy bars afterwards or if it's better to buy them first and just collect what you received from the estate after the sales and if there was any difference.

#### JeffM

##### Elite Member
Thanks I think I'm just overthinking the math. The big problem I'm trying to solve I guess if it would have just been better to collect the money and buy bars afterwards or if it's better to buy them first and just collect what you received from the estate after the sales and if there was any difference.
The main economic difference between buying now and waiting to buy is the effect of price changes. If you buy now and prices go down before the estate sells, you will not get fully reimbursed for your purchase. If you wait and prices go up before the estate settles, you will again not get fully reimbursed.

None of this makes much sense. The federal estate tax rate is high (40% I think this year), but it only applies to the amount that the estate exceeds 11 million and something. Most estates owe nothing in federal estate taxes. Moreover, it is levied on the estate as a whole, not on individual bequests, although six states do levy a tax on the value of inheritances. Having the estate sell and you buy does impose double transaction costs, once on the sale and once on the purchase.

#### Denis

##### Senior Member
Please excuse me, but I need help understanding the given scenario, as you've presented it. Comments follow.
You're BARred!!

#### Jchum

##### New member
I should mention I'm in Canada, my main interest was if there was a difference if with a solid price if there would be any difference in buying them before or after depending on the different estate payout percentages.

#### Otis

##### Senior Member
I should mention I'm in Canada …
Yes, you ought to have mentioned. Denis handles all of those accounts.

No, there's no difference. The relative percentages would not affect anyone's net gain. For each person, the same amounts shift around, but in a different order.

Using the 35% inheiritance as an example, compare buying before and buying after. In each case, start with nothing but $2100 cash in hand. Case 1: Gets inheiritance first$2100 + $1837.50 =$3937.50 cash in hand

3937.50 - 2100 = $1837.50 cash in hand plus$2100 in silver value
Total assets $3937.50 (an increase of$1837.50 over the starting $2100) Case 2: Buys bar first$2100 - $2100 =$0 cash in hand plus $2100 in silver value (no net change in starting assets) Then gets inheiritance$2100 + $1837.50 = 3937.50 Total assets$3937.50 (an increase of $1837.50 over the starting$2100)