A truly integrated wealth management plan works in tandem with your estate plan. Because tangible personal property (e.g. jewelry, books, art, photos, household furnishings, and more) typically carries significant sentimental value, it is likely to be a topic of discussion among your heirs and can be a challenge to navigate. Given the potential for conflict, and the difficulty in assigning each piece a monetary value and, thus, distributing it equally, below are some suggestions for how tangible personal property can be divided fairly.
Give away items during your lifetime.
The first thing you can do is to consider giving away special personal property while you’re living. This carries the added benefit of bringing you joy in seeing the appreciation of family members or friends who receive your treasures. It also allows you to tell stories about each item and why you’d like them to have it. Many people also find happiness in giving items to the youngest generation in their family, grandchildren or great nieces and nephews, for example.
Direct the sale in your will or trust.
When the estate includes a few items of significant financial worth that can’t be equally distributed among heirs, the property might be sold and the proceeds distributed equally as cash. Assuming items of sentimental value will be divided by some other method, other items can simply be liquidated.
Write down who you want to receive specific items of personal property.
Designate who you want to receive what in your will or in a separate written Memorandum of Gifts of Tangible Personal Property, where you list specific items in one column and the recipients in the next column. An important benefit of a side memorandum is that it doesn’t have to involve a lawyer, it does not need to be witnessed, and it can be changed and updated as you wish.
Spell out a procedure for dividing personal property items in your will.
In the absence of any specific direction in the Memorandum of Gifts of Tangible Personal Property, or to the extent this memorandum does not address certain items, the items will be divided among your beneficiaries. If you anticipate conflicts among your family and friends over your personal property, you can spell out a method for distribution in your will or trust.
Implement a financial adjustment after items are distributed.
What happens if one person ends up getting items with a total market value of $10,000 and someone else gets items worth $14,000? You could equalize the valuations at the end with the first person receiving an extra $4,000 from the estate. That way, no one keeps choosing items just to get the best market value.
The team at CCM is well positioned to advise you on estate planning strategies that support your wishes and create a positive experience for both you and your heirs. Contact your CCM advisor if you’d like to have a related conversation.
NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.
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