Thursday, June 13, 2013

Avoiding Conflict when Distributing Personal Property

      One of the primary reasons that a client prepare an estate plan is to ensure that there is a minimum of disagreement and turmoil for their loved ones following their passing. Client frequently spend significant time contemplating the distribution provisions for the bulk of their assets, but often give little thought to the distributions of their tangible personal property. In our experience, dividing jewelry, artwork, furniture, and other items of personal property can often cause discord among beneficiaries. A client should consider how personal property, whether of significant value or simply sentimental value is distributed
      While our primary concern is focusing on the monetary aspects of estate, we encourage our clients to consider who should receive items of personal property. Children or grandchildren may have an emotional connection to Aunt Jane's ring, Grandma's mantle clock, or even dad's golf clubs. We suggest our clients spend time with their loved ones, discussing if there are items of property they would each like to receive. Often clients come back to us surprised by the emotional value that their children attached to items of relatively insignificant monetary value. It may be a collection of cookie cutters that hold memory of holiday baking or hand tools that will always remind the loved one of their parent’s self-reliance. The small physical objects are often the most important items that a loved one inherits. By spending time learning about their loved ones strongest memories, it is possible for our clients to prepare a memorandum distributing specific items of tangible personal property to the beneficiary who will most appreciate the significance of those items.
      A client may also learn which items may cause the most conflict among their beneficiaries when the time comes to divide personal property. If two children express substantial interest in the same piece of furniture, jewelry, collectible, or any other object, clients can use the same memorandum they created to make special gifts to their loved ones to preemptively sidestep disagreements. These conversations allow the client to make decisions about distributions of personal property understanding why particular beneficiaries feel an attachment to particular property. For example, if two children express interest in the same wooden chest, clearly both cannot inherit the item. However, if through discussions the client learns that one child is actually attached to the smell of the quilts contained in the chest, while the other has strong memories of sitting on the chest, a client can distribute the chest and quilts separately and provide both their children with items they will cherish without creating any rift in the sibling relationships.
      Repeatedly in this post, we have referred to a memorandum for distributing tangible personal property. The use of the memorandum is a common technique that allows the client to provide a list of items they wish to be distributed to particular beneficiaries following the execution of a Will or Trust. Michigan statutes authorize the use of a personal property memorandum that is read in conjunction with the Will or Trust document. The client can make changes to distributions of these items over the years without needing to amend their Trust or draft a Codicil for their Will. The personal property memorandum is a tool we provide each of our clients to allow them to make gifts to their loved ones and limit family discord. As part of the estate planning process, it is important for clients to take advantage of this tool to gain its full value.

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