Drafting for the disposition of tangible personal property on the surface seems very simple. In reality, it can be the breeding ground for family disharmony, and in some cases, even lead to litigation. You wouldn’t think grandma’s gold necklace would lead to a citation, but experience has proven otherwise.
While it’s very easy to focus on higher-value assets, like real estate, estate planners should pay just as much, if not more, attention to the personal tangibles when drafting a client’s estate plan. We find that tangible property is often the asset most cherished by beneficiaries, even if it has nominal value compared to other assets within the estate.
Below are some helpful points we have seen incorporated within a plan that enables a smoother administration for the fiduciary and the receiving beneficiaries.
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Encourage clients to itemize their tangible property during life and have conversations with their family to determine which family members have an interest in certain items. You’d be surprised how often the family members have no interest in certain items or are only interested in receiving a few items.
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If the family members express they’re not interested in receiving any tangible personal property, the estate plan can be drafted so the fiduciary is directed to sell all items and distribute the net proceeds to the beneficiaries. In this way, conflict can be avoided.
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Further, if the family members express they’re not interested, the client may wish to dispose of the items during life and have a satisfying experience in engaging with recipients that the tangible property will bring value to.
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Continue to encourage clients to have an open dialogue with family members about their wishes with respect to tangibles, and explain why they have decided to bequeath certain items to certain family members.
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This allows family members to have a conversation and ask questions to better understand the decision, which in turn minimizes the emotional disruption during an estate administration.
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While many states don’t permit incorporation by reference of a separate memorandum of wishes concerning the tangible personal property, many fiduciaries find it very helpful to guide them in the ultimate disposition process, without the wishes being binding on the fiduciary.
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This also minimizes potential conflict during the estate administration and leaves flexibility for the fiduciary to pivot in the event of changing circumstances after the estate plan has been executed.
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Related to a memorandum of wishes, it can be helpful for the client to take photos of items or mark an appraisal to avoid confusion after death. For example, the client may bequeath “my longest gold necklace to my oldest daughter,” and then it’s determined that there are two gold necklaces of the exact same length. Had the client made notes or taken photos of items and marked them in accordance with their wishes, the fiduciary would have had clarity on which necklace was intended for the oldest daughter. While these ancillary photos and notes aren’t legally binding on the fiduciary, they can be extremely helpful to ensure that the decedent’s wishes are carried out.
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It’s important to draft for contingencies. For example, if a beneficiary predeceases, would the client want that item to pass to another beneficiary, or should it be sold? The drafter could also include language describing what would happen in the event a beneficiary refuses to accept an item that was specifically bequeathed.
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It’s important for the attorney-draftsperson to speak with the client to understand the family dynamics. For example, in some situations, the client may feel that their family will be able to figure out the ultimate allocation of the tangible property amongst themselves. In that case, the tangibles may be bequeathed to the family members in equal shares, and it would be up to them to determine the allocation of individual items. On the other hand, the client may believe their family would have difficulty agreeing to the allocation of property. In that case, the estate plan could be drafted so that the fiduciary has control over the entire process, either with complete discretion with respect to the tangible property or a detailed process can be established, such as a “round robin” where an order is established for each beneficiary to select items.
We have found that the more attention is paid to playing out the scenarios created by the words within a draft, the more a client will be able to engage with helpful family information that would inform the flexibility and/or clarity a fiduciary would want to execute their wishes. There’s no shortage of stories of things that didn’t work to use as an incentive for clients to pay attention to these provisions.
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