Question

A decedent's estate being settled by your bank contains an antique automobile. One of the directors of your bank, who is an heir of the decedent, indicates that she would like to buy it. The bank should:

a. sell it to her at a bargain price and befriend her.
b. have a qualified appraisal done and offer it to her at that value.
c. explain that she may not purchase the car from the estate.
d. arrange for a public auction at which she may buy the car if she is the highest bidder.

Answer 1

The bank should explain that the director may not purchase the car from the estate to avoid conflicts of interest.

Step-by-step explanation:

The appropriate response in this scenario is option c: "explain that she may not purchase the car from the estate." As a director of the bank and an heir to the decedent's estate, a conflict of interest arises. Allowing the director to purchase the antique automobile at a discounted price could be perceived as preferential treatment and raises ethical concerns.

To uphold fairness and maintain the bank's integrity, it is crucial to communicate to the director that purchasing the car directly from the estate is not permissible. This ensures transparency, avoids potential conflicts of interest, and upholds ethical standards, aligning with the principles of responsible governance and fiduciary duty that are expected from financial institutions and their directors.