DISTRIBUTING PERSONAL PROPERTY EFFECTIVELY

Often the hardest part of administering an estate or trust is the division of personal effects. Bank accounts, investment accounts, and proceeds from sold property can all be divided cleanly but the same is not always true with your jewelry, art, and family heirlooms. The trouble with these assets is that they often have a sentimental value which is difficult to monetize even if subject to an appraisal. What should an executor or trustee do when two siblings want great grandma’s Singer sewing machine? Or what happens when two people claim “Mary promised me the diamond bracelet?” What about when the Trustee decides “in fairness” to divide a silver serving set amongst beneficiaries rendering each piece of serving ware nearly valueless since the set has been divided?

Luckily, there are a few things you can do in advance to ease the distribution and make sure your wishes are followed.

1.     Gift personal effects during life. This is a good idea for things that you would be happy to see others enjoy while you are still alive. There are a few caveats with this plan. If you want to avoid potential finger pointing and accusations after your death you may want to make your gift known to others. It is not uncommon for the beneficiary of a piece of jewelry to be accused of stealing it. Gifting might not be a good idea for things that have increased in value dramatically during your life because they will lose a step up in basis. And remember that certain gifts will require documentation with the IRS.

2.     Itemize personal effects in will or trust. When creating your estate plan, you can draft “specific bequests” into the document.  This option makes things clear for your executor or trustee but requires formal updates in an amendment or codicil to make changes to these gifts in the future. Important and sought-after gifts should be sure to be included in the estate plan.

3.     Create a gifting log. Another potential option is to keep a memorandum or gifting log of gifts to be made upon your death. This is good for smaller items. Your estate planning attorney can make sure that your will or trust makes reference to such a gifting log to make it fully enforceable. The log can be updated without formally changing your will or trust.

4.     Creating instructions for executor or trustee. You can also create instructions for your trustee as to the method of distribution or sale. For example, you can tell your trustee that all beneficiaries should draw numbers to determine who will choose the first piece of furniture or jewelry. Or that all jewelry should be appraised and distributed based on value. You may also want to tell the trustee how or where to get an appraisal for a certain item. Often times you will know the best place to sell the collection of paintings you got from a local artist.

Always be sure to consult an experienced estate planning attorney when memorializing your wishes.