From the desk of W. Bailey Smith:
Many people believe estate planning is only about the money. But when it comes to personal effects, the real battle begins.
“Stuff” which is the legal term for non-titled property (like jewelry, art, silver, and antiques) is often the biggest source of unhappiness among families. Certain items have monetary worth and others are cherished for their sentimental value.
My client, John, recounted to me how, when his parents died, his sisters mistreated him. He became angry remembering his two sisters cleaning out their mother’s home and taking with them the sterling silver set that had been promised to John’s daughter. When John asked his sisters to return the sterling silver set, they stonewalled him. John never bothered to press the issue, but 20 years later, it still left a bad taste in his mouth.
Will this happen to your children? Since most children get along, you should leave your personal effects and the household contents to your kids equally, as they shall agree. This general instruction will allow your children to decide among themselves what each of their shares would be. However, if you have promised a certain item to a certain child, for instance your sterling silver set or your antique chair, you need to clarify this in your estate plan. In some families, the children who don’t get along need a referee to help them through the process.
Normally, you would state in your trust that all the personal effects and household furnishings are transferred into the trust and at your death, this “stuff” will pass equally to your children as they agree. However, your trust may become a public document and if you prefer privacy, you may draft a provision in the trust that you’ll make a separate Memorandum of Understanding outside of your living trust for distribution of personal effects. This is done in your own handwriting without your attorney’s review.
If you change your mind later about the distribution of a specific item, you can simply cross it out and write a new one or eliminate the entry altogether saving lawyer’s fees.
The Memorandum of Understanding is mentioned in your living trust, and as such, it’s part of the living trust and must be carried out after your death. Another option would be to create a letter outside of the trust telling your children what you want to have happen to the personal effects.
One family in a large estate left everything equally to their three children. There was no problem dividing up the stocks, bonds, and savings accounts, but when it came to the family’s valuable Meissen china, there was only one gravy boat. Each child got a place setting for four, but the gravy boat was the battle. I became the caretaker of the gravy boat for a number of years, handing it out to the respective children on a rotating basis for each Christmas, Easter, and Thanksgiving holiday.
Another solution is to give assets away while you are alive. For instance, if you have a taxable estate with valuable antiques or paintings or jewelry, you may want to divide it up with your children while you are alive. If it’s your jewelry, after you have given the jewelry away, you could ask your children to borrow it for those special occasions when you want to use the jewelry. By giving your jewelry away in advance of your death, you can get it out of your estate and avoid the 40% death tax.
One of the best ways to avoid the first child getting to the home after the funeral and stealing the valuable personal assets is to keep a written inventory of valuables and give these records to your successor trustee so that after your death, these records will act as a checklist to secure belongings that would pass to certain children.
In summary the best procedure then is to provide the successor trustee that with a memorandum (separate from the trust) whereby the client states who is to receive what. If that agreement cannot be found, then the backup plan is the successor trustee will distribute it equally to the children as they shall agree. If the children do not agree, then the personal effects will be sold, with the sale proceeds distributed in equal shares.