Personal Property, Contested Estates, Estate Administration

Personal Property, Contested Estates, Estate Administration

Keeping the Kids from Fighting Over the “Little Stuff” After You’re Gone

Provided By Alan G. Orlowsky

It is quite often the personal property causes the most heartache and disruption in families after a Contested Estate. Money doesn’t usually have any sentimental attachment, but personal property can have a perceived value far beyond its actual monetary worth. For example, there may be souvenirs from family vacations, various collectibles, or other items of sentimental value that are impossible to divide or duplicate. It’s helpful to discuss Estate Administration including personal property ahead of time, so you have a clear understanding of who wants what, and can anticipate and avoid problems after you’re gone.

Generally speaking, personal property is distributed under the laws of the state in which the decedent was a resident on their date of death. Real property (real estate), on the other hand, is subject to the laws of the state in which it is located. If you have significant personal property located outside of your official state of residence, distribution can be confusing. For example, if you own a Steinway piano that is located in your vacation home, the vacation home and the Steinway piano will each be treated differently.

Personal Property

Personal property such as jewelry, antiques, artwork, family heirlooms, and household effects can be passed on to your beneficiaries through a specific bequest: “I leave my Ming Vase to my sister Betty.” But for most people, it would be overwhelming to try to inventory and choose a beneficiary for every last item you own. Instead, it is common to use a separate “Personal Property Memorandum” that is attached to, and incorporated, by reference, into your trust.

The memo is generally a handwritten or typed list of your bequests to family or charities, which is signed and dated by you. They could cover each personal item that you own, but typically include only those items of financial value or of strong sentimental value – the types of things that could lead to disagreements among the heirs.

The things that you list on the Personal Property Memorandum should be described as specifically as possible. If you list, for example, “My favorite quilt goes to my daughter Mary” that instruction could be easily misunderstood. Does everyone know which quilt is your favorite? Do they know where to find it? A better instruction might be, “I leave the 6’x 8’ quilt, white with red roses and blue violets, which hangs in my bedroom, to my daughter Mary.”

The benefit of a memo is that it can be easily changed if you sell something, give it away during life, or change your mind about who should receive it after you’re gone. You simply throw the old memo away and replace it with a new one. Each personal property memorandum should be dated, and the trust should contain instructions that if more than one memo is discovered after your death, the one with the most recent date is binding.

Of course, you should also provide for personal property that is not specifically listed on the personal property memorandum. Over the years, parents have come up with interesting ways to distribute personal property items that aren’t the subject of specific bequests. They might instruct the executor or trustee to divide Monopoly money among the children, and let them “bid” on the remaining items. Or they might say that each child can choose one object, starting with the oldest and moving to the youngest (or vice versa), until all items are accounted for. Anything that is not selected can be given to Goodwill or the Salvation Army, or be included in an estate sale.

Most trusts will state that the trustee can dispose of personal property equitably to the beneficiaries, and if they can’t agree on the disposition, the trustee can sell the items and split the proceeds of the sale according to the trust distribution plan.

If you have questions regarding personal property, contested estates or setting up an Estate please contact Alan Orlowsky at 847-325-5559 or fill out a free consultation contact form.

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