TRUST & ESTATE PERSPECTIVES

Tangible personal property: how best to leave it to loved ones

What not to leave your loved ones when setting up a will

While crafting your estate plan, your attorney may ask you to consider how you'd like to gift tangible personal property, such as art, jewelry or antiques. You may want to pass heirlooms down to family members or leave certain collections to institutions or charitable organizations.

Whatever you wish to bequeath at your passing, care and consideration should be given to how best to dispose of tangible items, which is an often overlooked aspect of estate planning. Some folks mistakenly believe their loved ones will figure it out among themselves. To avoid unnecessary squabbling, headaches and expenses, leave a road map for the disposition of your tangible personal property and specialty assets.

Utilize a memorandum or letter of direction

There must be language in your will and/or trust to discuss the disposition of tangibles, but the how's, why's and to whom may vary greatly depending on what you are bequeathing upon your death. Your instinct may be to include the disposition of specific items when setting up a will, particularly those intended for certain family members. But specifically bequeathing particular tangible items in your will or revocable trust can often be more trouble than it's worth.

Utilizing a tangible personal property memorandum, a separate document, can often be a more efficient tool. It allows you to change your mind without having to change your will or trust. In Massachusetts, and some other states, this document is binding upon death, so your personal representative must carry out what it dictates.

Even if you don't consider certain possessions to be of high value, consider the sentimental value they may hold for family members. For example, while a piece of jewelry may not be worth much, if it's been in the family for generations, your grandchildren may want it as a remembrance of you. The dinner settings you put out each Christmas or the lucky golf clubs you've had for years may also hold significant personal value. Because the emotional stakes are high, these are the types of assets family members often end up fighting over.

The importance of sharing your intentions

Discussing the disposition of tangible items and other specific assets (real estate, vehicles, etc.) with family members gives them a chance to ask questions and discuss potentially hurt feelings should you become incapacitated or pass away. When everyone understands your thinking, and when you understand theirs, it gives everyone peace of mind.

Make a list of the items you plan to give away, and let the recipients know what your plan is. In some cases, the gift will be more meaningful because you've shared your intentions with them. However, you may also find that your children or grandchildren simply don't want certain items. When this occurs, you can give those items to another relative, or they can be sold and the proceeds left to your family instead.

Once you've decided how to dispose of specific assets, it's important to be as clear as possible about your intentions, especially when dividing an asset among multiple people or organizations. Perhaps you have an extensive art collection and you want your children to take the pieces that mean most to them and then donate the rest to a museum. Without clear instructions regarding which pieces belong to your children and which are designated for the museum, both sides could end up in a legal battle about who owns the artwork.

Guidelines for gifting real property and business interests

Leaving someone a summer cottage that's been in the family for generations may seem like the ultimate act of generosity, but if you don't plan carefully, it can cause disharmony in the family. Planning for the disposition of assets like real estate or ownership of a business can be aided by a well thought out plan and the guidance of your attorney, tax professional and financial advisor to determine the best way to structure the property transition.

If you plan to leave the house to your children as equal owners, bring them together and tell them; by doing so, you're giving them the option to decline. Maintaining a second home is a significant expense and you don't want to create a financial burden for your kids. Similarly, leaving an interest in a business to one or all of your children may create unforeseen issues. One child may have an active role in the business already and expect that they will receive it, while another may not want anything to do with it.

Discussing the transfer of these assets before you pass away also gives you a chance to discuss as a family the best way to handle the property and how it will be utilized and maintained going forward. Is it your wish that a vacation home or business interest stay in the family and not be sold? Might you want a charity to benefit from the asset if your children don't want it? Is utilizing a trust to administer this type of asset advisable? It's important that your loved ones understand your wishes and that you understand of their expectations.

Leave your loved ones with peace of mind

By talking to your loved ones about your intentions, you create opportunities to have important conversations about your decisions. You also provide some ease for when you pass.

As meaningful as your assets will be to your family, your greatest gift will be providing them peace of mind and understanding regarding these choices.

Katie is a Managing Director and Fiduciary Advisor at the Boston office. Prior to joining SVB Private, Katie was a Partner at DesRosiers, Tierney & Sheehan, LLC, and also practiced at Cody & Cody, LLC and Ruberto, Israel & Weiner. Her private practice career concentrated in the areas of estate planning, estate and trust administration, charitable planning, long-term care planning and elder law.

The views expressed in the article are those of the author and/or person interviewed and do not necessarily reflect the views of SVB Private or other members of Silicon Valley Bank Financial Group. The materials on this website are for informational purposes only, are subject to change and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein