Have you forgotten to finish your estate plan?
Ask your kids. You may be surprised. Personal property trumps money in most cases.
How "finished" is your personal estate plan when you leave our office, sign your funding documents, participate in your annual review sessions and update your trust as your estate changes and expands? The answer might surprise you!
It turns out that personal property distribution, as accomplished through your Personal Property Memorandum, (or the absence of such a memorandum), is one of the major reasons that heirs quarrel among themselves, seek legal help, go to court, and sometimes develop lifelong resentments.
A recent study conducted by Allianz Life Insurance Company was designed to evaluate how personal wealth is/will be distributed as the "greatest generation" [World War II] passes its legacy to the " baby boomers" [b. 1946-1965], who in turn pass it to their children and loved ones.
According to Ken Dychtwald, who conducted the study of 2600 seniors and boomers for Allianz Life Insurance Company, "Many people wrongly assume the issue is money…[but] it's way down the list."
Of most importance to children and other family members are items of personal property that hold special meaning for them.
If you stop to think about it, you may have feelings about certain items from your own childhood, but do you think your parents realize(d) the depth of your attachment? Perhaps it's not so surprising to learn that heirs will argue with great passion over some of these items because of what they represent (good times, special events, traditions, holidays, customs, habits), not because of what they are.
Still, while you may understand the concept of emotional attachment to certain objects, and even feel it yourself, you might be completely unaware of which of your personal possessions have emotional meaning to your children or other loved ones. Because such items are usually small, they are probably not formally titled as assets in your revocable living trust, so to direct that they be given to specific people on an itemized basis, they should be listed in your Personal Property Memorandum.
Although cash and other non-personal assets were also important to those who participated in the survey, disagreements over these assets are much easier to resolve. In many if not most cases, efforts have been made to equalize cash and property distributions or to distribute to the heirs based on level of need. And disagreements can be resolved by apportioning dollar assets. "Splitting" dad's clarinet or mom's garden tools obviously creates a much "thornier" problem!
Of the survey sub-group whose parents were already deceased, 3% said that financial assets had been the "greatest source of conflict," while 15% said that the greatest conflicts had been overthe distribution of personal possessions of emotional value.
By now we hope we've got you thinking about how you would like to distribute many of your personal effects, and perhaps you can look at this task from a different point of view. It's not really about dad's old tuba or mom's old garden tools, is it? It's about what they lovingly represent to someone in particular.
If you have adult heirs (or loved ones) or you are an heir-to-be, some communication has to take place if you intend your personal property to be given to more than one person (and even if you intend it for only one person, it's a good idea to say so!) And knowing what people want is better than guessing what they might want, wouldn't you agree?
If your loved ones are teens or adults, then you may do well to take a somewhat direct approach with them. There are several ways to do this (in person, in writing) and the method you choose should be in keeping with the comfort level of your family interaction and custom.
We have had several interesting experiences with clients who have asked for our help in drafting a Personal Property Memorandum and we know that even the closest families can experience a lot of discomfort about discussing issues even remotely related to death. There are a number of ways to approach this, not the least of which might be to consider whether you have personal possessions that you might like to give away right now, in a process of re-organizing, downsizing, moving, de-cluttering or just gift giving.
If your heirs are minor children, your property distribution choices may involve some creativity, some guesswork, and some reliance on an adult trustee to help you by safeguarding your property until the children are old enough to express preferences. At that point, your personal property trustee can follow any guidelines that you have designed. Often, it is only after children are grown that they realize how strongly they associate an object with a parent or grandparent. Why not do what you can, now, and review your PPM annually, just as you review your other estate planning documents?
