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SENIOR ADVOCATE

By Liza Horvath

 

Dividing Personal Property

 

When the two beneficiaries of the estate began to quibble over who got the small wooden jewelry box which appeared to be of nominal value, the trustee became painfully aware that the legal documents – the will and trust – did not provide much guidance on how personal property should be distributed.  Sam, acting as trustee of his recently deceased brother’s estate, was directed by the document to distribute the personal property to the beneficiaries, “in equal shares, as the trustee determines.”  

 

What did that mean? Should Sam spend the money to have his brother’s personal property inventoried and appraised so he could divide it evenly? The furniture, art and other items seemed routine and not necessarily “valuable” in the monetary sense. It also seemed to Sam that the beneficiaries were not as much interested in the monetary value of the items as they were in the sentimental value – and apparently they both held the same sentiment! Small issues like these can be a slippery slope to hurt feelings and long-term rifts in normally loving families.

 

So, what is the best method in handling the distribution of personal property in an estate? Generally speaking, using a “list, sale and donate” system seems to result in the most satisfaction from both the decedent’s point of view and among the beneficiaries of an estate. The “list” part of the process means that the decedent, prior to death, makes a list of personal property and puts the name of the beneficiary next to the item. The trustee then distributes the items to the beneficiary according to the list. An added benefit of the list method is that the decedent has an opportunity to note the history of an item and why the beneficiary should have this particular object. This passes not only the painting, vase or other asset but the personal value of the item, as well.

 

Once the things on the list are distributed, the trustee can, depending on how the document is written, allow beneficiaries to select other property they may want to keep. Families can use different methods for selecting items. Some families will simply decide among themselves who gets what, while other families may take turns picking items. Beneficiaries in one family were given equal amounts of play money to participate in an “auction” for the remaining property.

 

The rest of the personal items can be sold at either an estate sale or taken to a consignment store. The proceeds of a sale would then be added to the other funds in the estate and distributed to the beneficiaries according to the document. Remaining items may be donated to a charity and the value of the gift taken as a tax deduction on the estate income tax return.

 

With no direction left by his brother, Sam had to improvise so he had the heirs draw straws to see who got the first pick of personal property. What happened next was a pleasant surprise – the beneficiary that “won” the first pick choose the jewelry box - and promptly handed it to her sister.

 

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com

 


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