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In many states, past property theft is a volatile political issue that threatens to destabilize nascent democracies. How does a state avoid instability when past property theft causes a significant number of people to believe that the property distribution is illegitimate? To explore this question, I first define legitimacy relying on an empirical understanding of the concept. Second, I establish the relationship between inequality, illegitimate property distribution, and instability. Third, I describe the three ways a state can achieve stability when faced with an illegitimate property distribution: by using its coercive powers, by attempting to change people’s beliefs about the legitimacy of the property distribution, or by enacting a Legitimacy Enhancing Compensation Program (LECP), which strengthens the average citizen’s belief that she ought to comply with the law. Fourth, I develop the concept of a legitimacy disequilibrium, which is a decision-making framework that helps states decide if they should provide compensation to avoid instability. The framework requires states to weigh the cost of compensation against the cost of illegitimacy so I give a detailed description of what these costs entail. To best promote long-term stability, I argue that states should enact a LECP when the cost of illegitimacy outweighs the cost of compensation. Lastly, I outline the process a state should use to weigh the costs and decide whether to provide compensation for past theft to prevent things from falling apart.