One of the most overlooked elements of an estate plan is the planning for the distribution of a person’s tangible personal property. This property, which many people commonly referred to as “belongings,” encompasses jewelry, furniture, clothing, household furnishings, silverware, cars, boats, art work, and other physical possessions. Without question, the distribution of these items is often the source of family disagreements following a person’s death. Everyone has experienced first-hand a prolonged disagreement with family members over the distribution of a decedent’s personal property or knows someone who has. It makes no difference whether the items have significant value or only sentimental value. Moreover, the cost of the conflict generated by such items can be disproportionately greater than their actual value. What is “fair” or “equal” will mean something different to each family and a client’s distribution process should be tailored to fit a particular family’s dynamics. While a planner cannot change the emotional and sentimental minefields involved, which may have been years in the making, a skilled planner can help streamline the process and, hopefully, reduce potential family conflict.
Most estate planning documents include a generic disposition of tangible personal property which might provide something like:
I leave all of my tangible personal property to my spouse, or, if my spouse does not survive me, to my surviving children as they may agree. If my children cannot agree, my personal representative shall divide the property among my children in his or her sole discretion. I ask that my family members and personal representative follow any wishes I may have expressed in writing or otherwise about the distribution of such property.
Clients frequently opt for such a standard provision for one of two reasons: they truly believe their children will be able to agree (and they often don’t); or they believe they will have time to prepare a list of their wishes (again, they probably won’t). Ideally, the client has a meaningful conversation with family members ahead of time but that rarely is the case. Planners often are complicit in ignoring the issue since it seems less important than taxes or other more apparently challenging topics. Nevertheless, a planner still can help prevent or mitigate family conflicts during a vulnerable time for the family by running through the following checklist of common issues.
Who is Included in the Process? “Children” or “family members” often are the beneficiaries of the tangible personal property but consideration should be given to who else may participate in the process. Leaving the decision of who may get a “remembrance” to the surviving children may only create more stress and increase the opportunity for conflict. The planner should encourage the client to be specific about which family members will be involved (children, spouses, grandchildren?) and if any group or individuals should have priority in the process.
Detail the Selection Process. The client should be encouraged to provide suggestions for a selection process in the event family members cannot agree. In helping the client identify a selection process such as, drawing straws, a round robin or an auction, the planner should be sure to test the proposed approach against the client’s sensitivities and particularly with the family.
How Should Gifts Be Treated? It also can be tricky when a surviving family member feels strongly that a gift made to the decedent should be returned or that an item in the decedent’s possession had been previously “gifted” to him. While legally, there is no basis for the gift to be returned or the gift to be completed after death (absent clear direction from the decedent to do so), that is rarely the point. The client should be encouraged to state his intention about the distribution of items gifted to him during lifetime if there are significant gifts and to identify items which he “gifted” to family members but may have retained in his home.
Should Disproportionate Values of Items Be Addresed? Often the appraisal of the tangible personal property obtained for the estate tax return is used to value the items in the selection process. It is difficult for family members to select items which will have exactly equal value. The planner should be prepared to handle the inevitable issues caused by the disproportionate value of items selected by different family members. Discuss whether the client wants the disproportionate amounts equalized with supplemental cash gifts or the disparity ignored.
How Should Items with Purely Sentimental Value Be Distributed? Items with little or no value, such as photo albums, photographs or clothing, may be the most important from an emotional perspective. These items may not even be listed on the inventory or, if listed, given nominal value. The planner should address with the client, or after the client’s death with the surviving family, how such items will be disseminated. A professional could be hired to digitally reproduce photographs, photo albums and even artwork so everyone can have a reproduction of their own.
Ensure House Can Be Vacated Efficiently and Completely. Most families understandably will not want to turn their attention to the selection process soon after a family member dies. While a reasonable period of healing is necessary, it may be a matter of administrative necessity to move the family forward before they are emotionally ready. Selection of the items may not be enough and the planner may need to facilitate removal or delivery of such items. It is equally important to consider what should be done with any items that remain unselected so the residence can be completely emptied. A direction to the personal representative to donate, sell or dispose of such item, including files and papers, in his discretion, should provide the necessary guidance for preparing a residence for sale or rental.
In addition to reducing family conflict, addressing the orderly division of tangible personal property may help diminish conflicts between family members and those entrusted with the task of settling the decedent’s affairs. By providing direction and guidance, the planner can help diminish the perception that the legal representative, who is often a trusted family member or close friend, is abusing his authority or acting in his own self-interest. Even if the client does not wish to leave clear directions in his testamentary documents, the client can share his thoughts and feelings in a letter provided to the surviving family members. No matter what the approach, an ounce of planning is worth a pound of family harmony.