September Monthly Newsletter – Conflict Avoidance in Estate Planning: Tangible Personal Property

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

An often overlooked aspect of estate planning is documenting how to distribute tangible personal property after death. Relatively speaking, it is much easier to divide financial assets among your beneficiaries.

An investment account can be split and distributed, separate Beneficiary IRA’s can be established for qualified assets, and title to real estate can be split or sold with the proceeds divided according to your estate planning documents. Distributing tangible personal property, however, can be much harder and without proper planning, disposition of these assets can result in family conflict that could disrupt family relationships for years.

What is tangible personal property? Tangible personal property is property that can be seen, weighed, measured, felt or touched, or is in any other way perceptible to the senses.[1] Specific examples of TPP include: jewelry, clothing, furniture, furnishings, books, artwork, photographs and other family heirlooms. The grandfather clock that has been in your family for decades, your grandmother’s rocking chair, the earrings your mother wore for special occasions and your father’s favorite watch — all examples of tangible personal property.

Consider this common provision found in wills:

If my spouse fails to survive me, I give, devise and bequeath all of the rest, residue and remainder of my estate, both personal property and real estate, whether now owned by me or hereafter acquired and wheresoever situated, equally to my living children and to the surviving issue of a deceased child of mine by right of representation, outright and free of trust to have and to hold the same forever.

Let’s assume you have three children, at death you owned that grandfather’s clock mentioned above, and each of your children have a sentimental attachment to the clock. If this or a similar provision is in your will, you may be inviting a potential conflict into your family because the clock cannot be split three ways (and still function). Hopefully before you pass you’re able to plan accordingly and implement one of several options to address these potential scenarios during life.

Of all the options for distributing your tangible personal property, selling or auctioning off the property and dividing the proceeds may be the simplest and most effective. You could also give your beneficiaries the chance to bid on your property prior to the sale to the general public. The amount they bid could be reduced from the sale proceeds so they don’t have to actually pay for those assets. Meanwhile, everyone has a chance to bid on the items and the proceeds can be divided equally.

A tangible personal property memo could be referenced in your will, dictating which beneficiary is entitled to a specific piece of tangible personal property. If you choose this option, make sure to sign and date the memo and keep it in a safe place, preferably close to your other estate planning documents. Because this list does not need to be witnessed, you can revise the list from time to time as you add to or dispose of tangible personal property without having to go to your estate planning attorney. For most people, they may know which specific items for which their child has a sentimental attachment. For others, it gives them a chance to have the conversation while they are still alive so they can update their memo accordingly.

Another option that is a bit complicated but may be the most fair is a silent auction approach. The items subject to the silent auction are appraised by an independent appraiser with the results distributed to the beneficiaries. The beneficiaries can then place sticky notes with their name on it for the items they want with the combined appraised value of all property deducted from that beneficiary’s share of the estate. If only one beneficiary wants an item, they receive it. If multiple beneficiary’s want an item, each can submit a sealed bid to the Personal Representative, Executor, Trustee or other third party with the item going to the highest bidder.

If you’ve planned accordingly, you can attempt to avoid any potential conflicts between your beneficiaries with respect to the disposition of your tangible personal property. But if your will has the sample provision noted above, it will be up to your Executor, Personal Representative or Trustee to determine the appropriate method to distribute your possessions “equally.”

If you’re not sure whether you’ve adequately planned for the disposition of your tangible personal property to avoid conflict in your estate planning documents, talk to your Wealth Advisor today!


Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

Let’s Talk About Midterm Elections and Your Investments

This week was midterm elections and we’ve had many questions about what it all could mean, which we’ll tackle in today’s blog. We consider it a great honor to vote, and while we may not know the final results of the election for days (or even months), what we do know is the election will …

3 Nontraditional Ways to Give That Still Qualify for a Tax Deduction

Kevin Oleszewski, Senior Wealth Planner ‘Tis the season to give. In fact, 37% of charitable giving occurs during the last quarter of the year — 20% of it in December alone, according to a survey conducted by the Blackbaud Institute. And while the holidays are traditionally a time to reflect …

Considering Tax Loss Harvesting? What You Need to Know First

Kevin Oleszewski, CFP® Senior Wealth Planner As the tax year draws to a close, many high-income investors will look to reposition their portfolios to intentionally generate losses as a way to offset gains — an investment strategy known as tax loss harvesting.
1 2 3 60 61 62

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation