When most people think about creating a will or estate plan, they jump straight to thinking about financial accounts and their home. But what about all the stuff that’s inside their home? Things like grandma’s wedding ring or the vintage car in the garage or the furniture that’s been passed down through multiple generations. That all falls into the category of tangible personal property and needs to be considered in the estate planning process.
Tangible personal property includes any physical items that aren’t real estate, such as family heirlooms, jewelry, furniture, vehicles, tools, household goods, electronics, clothing, and more. Some of those items have value, and others don’t, but it’s still important to consider what happens to it after a person dies.
Understanding the emotional connection to stuff
Unlike financial assets, there’s often an emotional component to tangible personal property. A set of china may have little resale value yet mean the world to an adult child who remembers using it for Sunday family dinners. A grandfather clock may be seen as outdated and not worth much, yet it has marked time in the family home for generations.
Unfortunately, it’s not uncommon for tangible personal property to create conflict in families after a loved one passes away. Even in otherwise peaceful families, grief combined with emotional attachment can lead to disagreements over who should receive what. Siblings may recall different promises or assign different meaning and value to the same object. In some cases, items may even disappear before the estate is fully settled, which adds layers of conflict and heartache.
Recognizing challenges with dividing items fairly
One of the main challenges with tangible personal property is that it’s difficult to divide equally. Unlike a bank account, you can’t split a necklace three ways. Even if multiple items have similar appraised value, their emotional value can vary greatly.
While some tangible personal property items like jewelry or vehicles have a clear appraised value, many others do not. How do you value a childhood scrapbook or a handmade quilt?
If an estate plan overlooks tangible personal property, the executor or trustee is left to make difficult choices about how those items are distributed, which could lead to additional stress and tension within the family.
Thinking ahead about tangible personal property
Like many other things in an estate plan, thinking ahead about tangible personal property can help alleviate many of these concerns.
The most critical step in this process is to talk with family members. Are there any items that should clearly go to a specific person? What items are of interest to multiple people? Do the future recipients of those items have any thoughts around equitable distribution?
One option is to gift sentimental items while still alive. Yes, passing on a family heirloom early may still cause some family drama, but it can also create beautiful memories and simplify what needs to be addressed in the estate plan.
Completing a personal property memorandum
A personal property memorandum is a separate document that lists specific items and who should receive them. The personal property memorandum can be incorporated into a trust by reference to the personal property memorandum within the trust. It can be updated without having to amend the trust, which provides some flexibility over time. When completing a personal property memorandum, it’s important to be as specific as possible about the items to avoid confusion. Rather than simply listing “jewelry,” include an itemized list of the specific jewelry items.
When it’s time to execute the estate plan, the trustee will distribute items listed in the personal property memorandum first. The trust should include instructions on the division of items not listed in the personal property memorandum. It is also recommended that the trust include instructions for the trustee if there is a disagreement on the division of tangible personal property, such as giving the trustee the power to sell the personal property. The more specific the estate plan is about tangible personal property, the easier it is for the trustee to execute the person’s wishes for what happens to their stuff.
For individuals who do not have a trust, any specific distributions of tangible personal property should be included in their Last Will and Testament.
Estate planning is about more than passing on wealth — it’s about reducing confusion, honoring relationships, and creating a legacy. Taking time to plan for tangible personal property may seem less significant than planning for financial assets, but it can have a big impact on everyone involved in the process.
Comprehensive estate planning services
Wright Law Firm provides comprehensive estate planning to help individuals and families make a plan for their assets — both tangible and intangible. Our experienced team can guide you through the process to ensure your estate plan reflects your final wishes. Contact our team to get started or refer a friend, client, or colleague to our office for support.
