Estate Battles Over Personal Property Distribution

Creating and probating a last will and testament is rarely a simple task, but one of the most challenging aspects is the distribution of personal property, warns the article “Be clear about personal property distribution in your will” from The News-Enterprise. The nature of personal property—that it is relatively low in market value but high in sentimental value—is just part of the problem.

You’d be surprised how many families fight over a favorite ceramic dish or an inexpensive oil painting. However, those fights slow down the process of settling the estate and can create unnecessary costs.

The distribution of personal property is usually part of the residual estate, that which is left over when other assets, like a home, bank accounts, etc., have been distributed. Some families don’t even have a chance to select items, and instead find themselves in irrational bidding wars at estate sales.

This issue may be avoided by having precise language in the last will and testament or living trust about these items. First, the testator, the person who is creating the will, or the trustmaker, if using a trust, should outline the specific items they want to be given to specific people. Promised items should be listed and removed from the general pool of personal property.

Next, the testator or trustmaker, names who should be included in the distribution of remaining personal property. While some people list the same recipients of the full estate, this is not always the case, particularly if there are no children or if property is being left to charity. One option is to limit the beneficiaries of personal items to only close family members.

Third, provide clear directions for how the remaining items will be distributed. Will beneficiaries take turns in a defined order? Should the property be appraised, and values being divided equally by the executor? Be as specific as possible.

However if the person changes his or her mind, then they need to go back to the attorney to make an amendment to the will or trust. One solution to this is to use a personal property memorandum to list items for each intended beneficiary. When I do a living trust plan I provide these for all my clients. Thus it only costs a few cents for the photocopy of the form instead of legal fees.

If there are any unclaimed items, provide instructions for those as well. Do you want a collection of expensive cookware to be sent to a charitable organization? Clothing, furniture, and other items should be either donated to charity or sold at an estate sale, with the proceeds distributed between the beneficiaries.

Another way to avoid conflicts over personal property is to give away items, while you are living. Sentimental gifts are a good alternative for holiday gifts, especially for seniors on a fixed budget. This way the items are clearly out of the estate.

A warning for those who are thinking about taking the “sticky note” system: it rarely goes off without a hitch. Attaching stickers to items with the name of the person who you want to receive them is vulnerable to someone else removing the stickers. Similarly, naming one person to distribute all personal items could lead to strife between family members. There’s no legally enforceable way to ensure that they will follow your wishes.

Address the issue of personal property with your estate planning attorney. They will be able to help determine the least acrimonious means of ensuring that the people you want will end up with the things you want.

My office is fully open to discuss these and any other estate planning issues. We can schedule an in person consultation or do it virtually through Zoom.

Reference: The News-Enterprise (Sep. 29, 2020) “Be clear about personal property distribution in your will”

 

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How Do You Ask Parents about Estate Planning?

How do you ask your parents about their estate planning? No matter how you slice it, it’s a touchy subject to bring up.

You don’t want to come off as greedy when asking your parents about their estate planning.  However, you need answers to certain questions to ensure that their financial wishes are carried out and there is a smooth transition of wealth and assets.

Yahoo Finance’s recent article entitled “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)” shows us how to approach this touchy subject and get the info that you need.

Begin by asking your parents about whether they have an estate plan. You can tell them that they don’t need to share the numbers and that you just want to be able to follow their instructions. A good way to start this conversation, is to acknowledge how awkward and difficult this conversation is for you. You should emphasize that you don’t want to think about their deaths but are just trying to sort things out.

Experts say that you’ll likely get a better reception from your parents, if you let the conversation happen organically and not schedule a time to talk. No matter how you approach the topic of an inheritance from your parents, the objective of the discussion is to make certain they have a plan in place, so there will be a clear path for whomever is left behind to go forward. You can start by asking if they have these key legal documents:

  • A trust or will
  • A power of attorney; and
  • A living will or health care directive.

Ask where your parents keep these documents and how you can access them, if necessary.

You should also ask if your parents have written funeral or burial instructions. What are their wishes concerning long term care possibilities such as needing to move to a nursing home versus staying in their home. Have they provided financially to cover these expenses or taken legal strategies to protect against those situations.

You also need to ask them to give you other important information, so you can handle their finances if they are unable to or when they die. This includes account numbers and passwords, insurance policies, information on their retirement plan or pension administrator, as well as the contact information for their accountant, attorney, financial planner, or other financial professional.

I am here to help you and your family discuss planning for these needs. Please call me to explore any ideas further. We can schedule in person consultations or conduct them virtually through Zoom.

Reference: Yahoo Finance (Oct. 7, 2020) “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)”

 

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Cornelius Vanderbilt Created an Estate Plan, but Should I?

AJC’s recent article entitled “Why Vanderbilts should inspire you to create an estate plan” explains that when Cornelius Vanderbilt died, his son, William, inherited most of the fortune and nearly doubled it within a decade. However, after that came a drop in the cash, and after just a few decades, the fortune had been spent. Therefore, none of Vanderbilt’s descendants stayed among the wealthiest people in the country.

When 120 Vanderbilt family members recently gathered for a reunion at Vanderbilt University, not one was a millionaire. In a century, the largest estate America has ever known had dwindled to next to nothing.

Let’s look at why this happens and how you can prevent this from happening to your estate.

America is currently in the midst of the greatest transfer of wealth ever. An estimated $59 trillion will be transferred to heirs, charities and taxes between 2007 and 2061. However, roughly 70% of wealth transfers aren’t successful. This means that sometimes heirs get practically nothing. There are three reasons for this failure:

  1. No trust and communication among heirs because they’re all concerned about their share.
  2. Heirs are unprepared to inherit an estate, which may include managing investments or a business. In many cases, other family members don’t know how it works.
  3. Heirs have no clue where the money should go and what purpose it should serve because no one is thinking long term about what is best for the family assets.

It’s common for business owners to believe that an estate plan is enough to keep everything in order, but they don’t consider their business. This is the reason why succession planning is vital. This planning determines what happens to the business itself and lays out the strategy, so it continues to operate smoothly after it’s passed to the heirs.

Let’s look at some tips for dealing with estate planning that should make for a smooth transition:

Create a plan. If you die without a will, state probate law will determine who gets your assets. This may not be what you want. Talk to an experienced estate planning attorney to be certain that everything is drawn up correctly.

Discuss the issues with your heirs. Talk to your family about the financial details. Make sure that your heirs know the details of your estate, so they can start to manage and oversee it once you die.

Get heirs involved in the process. Likewise, heirs can help plan based on their knowledge, future availability and expectations. By planning now, no one will be caught unaware about what to do with the estate.

Ready your heirs. Educate your heirs on how to manage and oversee your assets, especially if you have a succession plan for a business. Discuss the company’s mission and vision, and what you want the company to achieve.

Organize your financial documents. Get all financial documents in a single location and label everything clearly to help out your heirs. Keep this in a safe location, and let your heirs know where it’s located. Your attorney should also have a copy of your will, estate plan and succession plan (if applicable).

Get help from experts. Help forge a relationship between your heirs and your financial team, which may include a financial adviser, an estate planning attorney and an accountant. This will allow your heirs to know who to call, if things get complicated. It’ll also help to prepare them for what they’re supposed to be doing, once they get their inheritance.

Communication is the key. Talking with your experts and your heirs will make certain that everyone understands each other’s roles, regardless of whether it’s a small business or a multimillion-dollar empire.

My office is fully open to handle your estate planning matters. Please contact me to schedule a consultation, which can be done in person or virtually through Zoom.

Reference: AJC (Sep. 25, 2020) “Why Vanderbilts should inspire you to create an estate plan”

 

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