Estate Planning: A Thoughtful Approach to Tangible Property

With proper estate planning, the big-ticket items like real estate, valuable artwork, and heirloom jewelry are often addressed directly in the estate planning documents. Some of the most argued-about items during the estate settlement process are often not over money or items of monetary value. The disagreements often stem from claims to personal property or stuff that people accumulate over their lifetimes. The holiday candle holders that grandma would get out each Christmas, grandpa’s fishing lures, a souvenir coffee cup used for serving hot cocoa after an afternoon playing in the snow at grandpa and grandma’s house, the antique rocking chair that sat on the front porch at Aunt Betty’s — these are the sentimental items that can create turmoil amongst family members when a loved one passes away. Loving, well-behaved family members can dig in their heels, staking claim to what would otherwise be considered trivial objects.

Many of us would like to think that this won’t happen in our families; but it can happen, and often does, even to the best of us. This type of conflict has the potential to inflict serious damage to a family that is already in mourning over the loss of a loved one. Adult siblings often resort to behaviors they thought they had outgrown, seemingly transporting them to when they were squabbling children. Even in-laws that had been considered an integral part of the family can try to interject their opinions on the division of sentimental items.

This begs the question: How do we prevent such consternation at a time when families should be coming together, united in shared sadness and remembrance of the loved who has passed on? The answer is simple: a list. That’s right, a tried and true list. Those of us in the industry often refer to this list as a personal property memorandum. Michigan law provides in MCL 700.2513 that a Last Will and Testament or Trust may refer to a written statement or list disposing of items of personal property not otherwise disposed of by the Will or Trust, other than money.

When writing your personal property memorandum, it is best to keep things simple. It should generally resemble a list of items with a corresponding person you wish to inherit each item. It can be handwritten or typed but must be signed and dated. One of the most appealing aspects of a personal property memorandum is that this list can be revised, changed, thrown out, and begun anew at any time, without having to change the Will or Trust itself.

The following requirements must be met in order for a personal property memorandum to be legally effective:

• Your Will and/or Trust must state that you may leave such a list.
• If you are using a living trust to distribute your estate, your attorney should also draft an Assignment of Personal Property that defines what you mean by tangible personal property and generally describes the property to be disposed of by the list, i.e., “household furnishings” or “electronic equipment.”
• The list must describe the items to be disposed of with reasonable certainty to provide clarity for your personal representative or trustee.
• It must be dated and signed by you.

In addition to the legal requirements, an effective personal property memorandum should address the following practical considerations:

• Have a discussion with your children, or other individuals, who are going to inherit personal property from you about what each of them would like to receive. As is often true in other areas of life, we may think we know what someone else wants but until you ask, you won’t know for certain.
• Having these discussions will iron out who wants what or, in some cases, you will be lucky enough to learn that nobody really wants your stuff, in which case you can save yourself the headache by not having to make a personal property memorandum.
• If this discussion reveals that multiple people want the same thing, then you will need to decide who gets it and make sure the other person gets something else that they really want. I recommend having a frank discussion with each of them so all parties are aware both wanted the same item, that you have attempted to divide the items up fairly, and because one of them got something they both wanted, the other got something else they really wanted. If your beneficiaries know you knew they both wanted the same thing, the person who did not get it (or their husband or wife) will not be able to make trouble by claiming you would have left it to them if you knew they wanted it, someone else filled out the list for you, etc. In other words, if you have this conversation, everyone is more likely to honor your wishes without creating conflict later.
• Simplicity is key. It should describe the property and who gets it. There should be no conditions or additional language that is open to interpretation or that may conflict with your Will or Trust. Ambiguities can lead to legal work or the need to go to probate court, which may slow down settling your estate and increase attorney fees associated with finding a resolution.

The Will or Trust should describe who gets the rest of the items of tangible personal property that you own that are not distributed per the list. Provisions to consider including in your Will or Trust are:

• Give your personal representative or trustee the authority to use a rotation system so that your heirs select the other items they want (that you did not include on your personal property memorandum) whereby they each pick one item and repeat the process until everything has been divided.
• Alternatively, you may give your personal representative or trustee the authority to divide these items up amongst a group of people that you define.
• Another option worthy of consideration is that the personal representative or trustee has an estate sale and then divides up the money amongst your children or other beneficiaries.

A personal property memorandum for your individual effects is an important part of an estate plan to address how you want your personal property to be distributed. A well drafted Will or Trust accompanied by a personal property memorandum, completed after following the recommendations outlined above, can avoid legal costs and family disputes along with the potentially permanent damage to family relationships that can occur when the distribution of your stuff is not properly addressed by you. Please reach out to your Trust Relationship Officer for a review of your existing Will and Trust to determine if a codicil or amendment is needed to allow a personal property memorandum.