After a loved one dies, personal possessions often take on added weight due to what they represent, and the memories attached to them. This can often lead to conflicts in settling an Estate or Trust. Personal property refers to all of our stuff: The dining room table, our cars, jewelry and other things. For some, these possessions can be quite valuable, if there is some original piece of art, for example, or a coin collection. I had an estate sale 2 years ago that grossed over $80,000, which shocked me. Usually, you have trouble getting even charities to take the stuff away.
First, we want people to avoid Probate and so we want everyone to have a Revocable Trust as the foundation for their estate plan. This allows the Trustee to distribute the Trust assets including personal property without Court involvement and the expense and delay that goes along with that.
But even when people have Trusts, there are some estate planning attorneys who have the personal property pass through their Will. Potentially this can be a problem if there are valuable items that cause the total value to exceed $166,000 (the threshold for Probate in CA). Assigning all personal property to the Trust is a much smoother way to handle distribution of personal property.
Just making personal property Trust assets is not enough. You should still take time to think about any particularly valuable or sentimental items and how you want those items distributed. In one case the Trustee had a dozen valuable pieces of jewelry and without instructions he had the 3 beneficiaries draw cards and high card picked first! Other Trusts use complicated bidding formulas (like picking a fantasy baseball team I suppose). One common default is to just say you want everything to be equal but then leave it to the Trustee to determine what is equal and fair.
We don’t need to list every spoon and fork, but it is helpful to your family to spend some time identifying those special items that you want to go to a particular person; a child, grandchild, niece or nephew. Another suggestion is to give away some of these things now, when you can experience their appreciation and enjoyment of these gifts.
Like all aspects of estate planning, the key word is planning. Planning ahead and being thoughtful will payoff in the long run. While leaving everything to the Trustee’s discretion is one approach, that approach works much better when the big-ticket items have already been accounted for by you in written instructions for the Trustee to follow. Lastly, it sometimes helps to have conversations with our children about these items because we’ve also seen items that parents feel are prized possessions akin to the crown jewels that the children have no interest in whatsoever! So having the conversation can open our eyes to how our children view our stuff.