Mixer Feelings

While a great deal of an attorney’s responsibility attaches to understanding the law, in the area of estate planning an experienced attorney will also serve as a guide, counselor and mediator, assisting client's designees as they navigate complex family dynamics. It is important to communicate to beneficiaries left behind after a client has died the wishes of the client as laid out in the estate planning documents. While a beneficiary may disagree or be unhappy with the terms of the documents and what has been left for them, it is important that all beneficiaries understand the intent of the client and that arguing against it can cost all parties significant time delays and expense. Despite this process, a may still act against their own best interest and the best interest of the other beneficiaries.

Ramona was a lovely woman who had strong, but different, relationships with her two daughters, Samantha and Tammy. Ramona's relationships with her daughters reflected different hobbies that each enjoyed, and because of differences in Samantha and Tammy’s personalities, Ramona's relationships with her daughters rarely overlapped. Unfortunately, while Samantha and Tammy's different personalities allowed Ramona to enjoy time with each of her daughters, those personality differences also created deep-seated tension between the sisters.

Following Ramona's death, Tammy and Samantha were named as co-trustees to administer their mother's Trust, but unfortunately almost immediately problems began to arise. Shortly after Ramona's death Tammy went to Ramona's home and removed a number of items of personal property. In response, Samantha took steps to secure Ramona's estate planning documents, which led to rapidly escalating retaliatory actions between the women until both realized that they would be unable to continue the administration of their mother's Trust without some sort of mediator. We had represented Ramona in preparing her estate plan and, thankfully, her daughters trusted us to act as impartial arbitrators and guide them through the administration process.

Tammy and Samantha divided the administrative efforts so that their contact would be minimal and for the most part occur using us as intermediaries, which worked well until it came time to address the division of the remaining personal property. This portion of the administration grew increasingly acrimonious as Samantha and Tammy continued to argue. The argument came to a head in our offices where we met with the two women in separate conference rooms and attempted to sort out the cause of their fighting. After much discussion, it became clear that Samantha was particularly incensed by Tammy's initial removal of items from Ramona's house, including a KitchenAid stand mixer. That mixer was a particular sticking point because Samantha knew that Tammy already owned a stand mixer and therefore likely had no need for Ramona's mixer.

When we broached the subject of the mixer with Tammy, she shared with us a number of wonderful memories of her time speaking with her mother and recollected how impressed Ramona always was that the mixer she received as a wedding present held up so well over many decades of use. Tammy indicated that she hoped her mother's mixer would continue to serve her just as well and help her to remember her mother every time she baked. As Tammy shared the story, it became clear that her initial action had not been malicious, but that she never considered how Samantha might feel about the situation. The idea of a compromise began to form and we returned to speak with Samantha.

After confirming that Samantha did not share Tammy's sentimental feelings about the mixer we brought the two women together and asked Tammy to share the memories of baking with Ramona with her sister. After Tammy recounted all the years that she baked with her mother, we were able to work out an arrangement where Samantha received Tammy's mixer, Tammy kept Ramona's mixer, and the two sisters began the process of healing their relationship. While I cannot say that we created lasting peace in our time, we did at least enable the family to effectively administer their loved one's affairs.

While not all conflicts are as simple to resolve as swapping small appliances is important to recognize that often what seemed like insurmountable conflicts have their roots in relatively small transgressions and with proper assistance, it is possible to begin the healing process. An experienced estate planning attorney will do more for the family than prepare documents or go to the Probate Court. They can also help strengthen family bonds in the face of emotional difficulties.

Matt and Al

The Importance of Personal Property

Today's blog examines an often overlooked part of estate planning. Clients often presume that their children will simply sort out personal property, without considering the potential pitfalls of leaving such decisions up to others. Including a Personal Property Memorandum as part of an estate plan is an excellent way to limit those issues. 

     One aspect of estate planning frequently overlooked by clients is the distribution of their tangible personal property. "Tangible personal property" includes all of the clients possessions that do not otherwise have a title or ownership designation. As part of our estate planning we use an Assignment to designate the Living Trust as the owner of all of these items. We also provide the client with the ability to leave a list of specific gift of tangible personal property.This Personal Property Memorandum may be changed at any time, without amending the Trust, and is read as part of the Trust after the client’s death. Unfortunately, when we bring this to the client’s attention, they often give it short shrift, indicating that they do not have anything of value or that they believe their children will not care about the personal property.

     Treating tangible personal property as an afterthought or unimportant is a common source of discord in the administration of a client’s estate or trust. Clients fail to account for the their loved ones attaching significant emotional value to items that lack significant monetary value. As an example, children may fight over which of them inherits their mother’s KitchenAid mixer because one of them has a strong emotional attachment to the mixture as a reminder of all the times he and his mother baked together for the holidays, while the client’s daughter simply would like a mixer for her own home. It never occurs to either sibling to explain to the other why they place such a high value on their mother’s mixer, thus resulting in misunderstandings and hurt feelings.

     Whenever our clients indicate that they feel their tangible personal property is not significant in their estate planning we encourage them to take time to sit down with their loved ones and discuss which items may hold emotional significance. This conversation, as much as any other conversation, can alleviate surprises and problems after the client’s death. In addition, it allows the client and their loved ones to begin a discussion about what will happen after the client’s death without focusing on difficult matters to discuss, such as illness and the money. Not only do clients gain a better understanding of what their children value, they also have the ability to limit any unnecessary conflict that otherwise might have arisen after their death.

     Tangible personal property often carries the most emotional significance to a client’s loved ones after their death. For a client concerned about maintaining familial harmony and ensuring the smooth administration of their estate, taking time to prepare a personal property memorandum can significantly reduce the chance of problems after their death. 

     It is important to remember that while the personal property memorandum is a common tool in estate planning is not universally included in every document. Different documents will treat the memorandum differently, some give it different priority from the other terms of the trust, and some trusts omit this option entirely. Clients should consult an experienced professional to determine under what terms they can make use of a memorandum in their planning.

Avoiding Personal Property Fights

While we value our client's privacy and would hate to have any of their affairs end up as a news story, there are lessons that are better learned by observing others than by experiencing them ourselves. With that in mind today's blog addresses an all to common problem that arises even when an estate does not contain an Oscar statuette. 

A current news story about the actor and comedian Robin Williams's estate is a clear example of why complete estate planning is necessary. The comedian's wife, Susan, and children  Zachary, Zelda and Cody are fighting over his estate, specifically personal property. Susan, married to Williams for three years, is claiming personal items that the children argue were to be given to them.

The dispute centers around two houses owned by Robin Williams at the time of his death. Williams' Trust grants Susan one residence and its contents upon his death, but there is another clause that says that his children get all of his "clothing, jewelry, personal photos taken prior to his marriage to his current wife,... memorabilia and awards in the entertainment industry and the tangible personal property located in Napa."  The wife is asking the court to define "memorabilia" to exclude Williams' collections , including Japanese anime figurines, antique weapons, carved boxes, theater masked, rare books, lapel pins, fossils, graphic novels and skulls, which the children are claiming. 

While Robin Williams carefully thought out his estate planning to protect all of his loved ones, he, like many others, failed to specify in detail personal property bequests. This can lead at a minimum to hurt feelings and can escalate into significant family disharmony and tear families apart.

Rather than leaving personal property bequests to the interpretation of various beneficiaries or the courts, it makes more sense to specify personal property bequests in a "Personal Property Memorandum", coordinated with the client's Living Trust, detailing specific beneficiaries for various personal items including, artwork, collections, specific pieces of jewelry, and any other personal property. 

We all have the ability to prevent family squabbles over personal property, whether of great value or sentimental value. Why leave it to others, including the courts, to guess or argue about how we really wanted our personal property to be distributed.

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.

Matt Ferrara

Pitfalls of Personal Property Distribution

     Personal property, everything that a person owns that does not have an ownership designation or title, can become the most difficult part of distributing an estate. Even if there are no arguments as to who inherits the property, personal representatives and trustees, may face substantial issues in distributing personal property. 

     One category of items where questions typically arise involves the distribution of firearms. In the majority of circumstances, the fiduciary can transfer firearms to designated beneficiaries when those individuals acquire the proper transfer paperwork from their local law enforcement agency. Problems, however, arise if beneficiaries reside in other jurisdictions, or if the designated beneficiaries cannot legally own firearms. 

     In the case of an out-of-state beneficiary, it is important for fiduciaries understand that federal law prohibits the transportation of firearms across state lines for delivery to another person without a proper license. An exception allows a beneficiary to transport such firearms, but that exception does not extend to personal representatives or trustees. Therefore, a beneficiary who stands to inherit firearms must come to the state where the deceased individual resided to claim their inheritance. If this is not possible, fiduciaries are advised to arrange for the transportation of inherited firearms through a licensed gun dealer. 

     In addition to problems arising with the physical transfer of firearms, fiduciaries must also confirm that the individuals named to inherit firearms are eligible to own such weapons under state and federal law. Failure to do so may expose the fiduciary to felony charges for disposing of the gun to a prohibited person. Federal law provides reasons why an individual may be ineligible to own a firearm, including: 

• Being convicted, in any court of, a crime punishable by imprisonment for a term exceeding one year; 
• Being a fugitive from justice; 
• Being an unlawful user of or addicted to any controlled substance; 
• Having been adjudicated as a mental defective or having been committed to any mental institution; 
• Being illegally or unlawfully in the United States 
• Having been discharged from the Armed Forces under dishonorable conditions; 
• Being subject to a court order that restrains such person from harassing, stalking, or threatening an intimate partner of such person; or 
• Having been convicted in any court of a misdemeanor crime of domestic violence. 

States may have additional restrictions against gun ownership. In these circumstances, the fiduciary must dispose of the firearms in a manner that complies with the decedent’s instructions but does not expose the fiduciary to liability for violating state or federal law. In many circumstances, the controlling document provides that the fiduciary may sell items of personal property and deliver the proceeds to beneficiaries. If this is not an option, the fiduciary should appeal to the Probate Court to amend the provisions of the controlling document in order to avoid exposing the fiduciary to liability for an illegal gun distribution. 

     In addition to firearms, fiduciaries should be aware of other regulated items that may appear in the personal property of an estate. This may include items made from parts of endangered species. Significant restrictions apply to the sale and transfer of such items. 

     A recent example of one such item occurred when the beneficiaries of a New York art dealer, Ileana Sonnabend, inherited Robert Rauschenberg's mixed-media work, Canyon. The piece, which contains a stuffed bald eagle affixed to the canvas is valueless because it is a felony under the Federal Bald and Golden Eagle Protection Act to sell any item made with any part of a Bald or Golden Eagle. The IRS determined that, despite being unsellable, Canyon had a fair market value of $65 million and sent the Sonnabend Estate an invoice for $29.2 million in estate taxes. The case eventually settled when the Estate agreed to donate the piece to the New York Museum of Modern Art, for public exhibition, in exchange for the IRS rescinding the tax assessment. While very few instances of personal property will rise to this level, artwork made out of ivory, the feathers of endangered birds, and items of archaeological significance may appear in the estates of older individuals who obtained such items when the transfer of such items was not subject to regulation. If the fiduciary discoverers any items of this nature in the process of inventorying the assets of an estate, it is important to contact professionals who have an expertise in the transfer of such items in order to protect the fiduciary from exposure to any criminal liability for the transfer of such items. 

     The distribution of personal property is not always as complex as the scenarios discussed in this writing, but it is important to discuss with clients the scope of their personal property in order to establish a plan that reduces any potential liability for future fiduciaries. It is also important to work with fiduciaries to ensure they are aware of the laws that may expose them to personal liability as they execute those roles 

     If you have questions or concerns regarding specific items please do not hesitate to contact us and we will be happy to discuss those questions and assist in creating a plan that addresses those concerns