An interesting issue that needs addressing when undertaking estate planning is the handling of a person’s Tangible Personal Property. When discussing this with clients during the estate planning process, I affectionately refer this as a person’s “stuff”. Couches, chairs, books, jewelry, etc.
This can often be an overlooked part of a person’s estate plan. By its nature, Tangible Personal Property presents a distinctive challenge in distribution. While money can be divided equally, Tangible Personal Property usually cannot. The uniqueness of some cherished items lends the distribution to result in conflict and even litigation. Most lawyers have amusing anecdotes or head shaking horror stories about family members fighting over grandma’s China, grandpa’s gold watch or the infamous “velvet Elvis”. These seemingly trivial items can be very treasured by some family members and should be handled with careful consideration.
Unfortunately, most people do not designate specific beneficiaries for items, instead leaving the distribution up to the heirs and the Trustee (of a Trust) or Personal Representative (of an estate) to decide. This uncertainty can lead to power struggles within the family, where childhood slights, jealousy and even bullying control decision making. As unbelievable as it sounds, it happens.
As an estate planning attorney, part of my role is to counsel clients as to how to approach these situations, hopefully during the planning process. Conversations with family during life regarding Tangible Personal Property can set proper expectations all around. Decisions can be made, including methods to be used for distribution following a person’s death, or even to consider giving items to the intended beneficiaries during life.
When handling personal property after a person’s death during the administration process, setting clear expectations is key. The Trustee/Personal Representative needs to know what the plan is prior to taking control. It is not uncommon for families to gather shortly after a person’s death for a funeral or memorial. Many times, family members come from out of state, and understandably see this as a logical time to take Tangible Personal Property items home with them. While this may seem like an opportune time to distribute items, if done hastily or secretively, it can start the entire administration process off on the wrong foot. Beneficiaries need to be notified delicately, but clearly, that the Trustee/Personal Representative is in charge, and what the plan is for the handling of Tangible Personal Property. Beneficiaries should not remove items from the home without the knowledge and consent of the Trustee/Personal Representative. Good communication on the part of the Trustee/Personal Representative can alleviate conflict and help the process go as smoothly as possible. Another interesting issue to consider is the value of the Tangible Personal Property. This includes the value to beneficiaries and the value on the open market. Over the last 15 years or so, I have witnessed a dramatic shift in how “stuff” is viewed- particularly by the heirs. Increasingly, we see beneficiaries who are not interested in most of the decedent’s Tangible Personal Property. Whether it’s people living longer and the beneficiaries not needing the items, differing tastes, or even a change in perspective regarding the importance of items, the trend is clear.
On a pure economic level, the combination of an increasingly disposable society and the internet resale sites has made everyday items, such as used kitchenware and household items, not nearly as marketable as they were previously. Further, the antiques market has also seen a huge decline over the past 20 years. These factors make few Trustees/Personal Representatives interested in holding sales themselves, as it may not be worth the time and effort.
Estate liquidation companies are an area of growing business as downsizing during life or estate sales after death are becoming increasingly common. Often, these sales advertise heavily, or are held exclusively, on the internet. Many of these companies provide services to clear the home of the Tangible Personal Property, and the company, in turn keeps a percentage of any sale that takes place. Other companies purchase the entire contents of a home for a set price, taking on the responsibility of emptying the home for the eventual sale. While these services can be very helpful in getting the home, which is often the primary asset of an estate, ready for sale, the Trustee/Personal Representatives needs to recognize the importance of communication regarding this process. Allowing beneficiaries the ability to choose items and understand the process can be crucial for ongoing family harmony.
One last issue to consider is how to handle the expense of shipping, storing, or disposing of Tangible Personal Property. A well drafted Will or Trust will include provisions designating how to allocate these costs. It is crucial for a Trustee/Personal Representative to know how to allocate these costs when administering the Trust/Estate.
As with many areas of estate planning, clear drafting and communication can help to avoid disagreements, and can prevent your family from engaging in some of the disputes we all dread.