When a loved one passes away, families find themselves under tremendous physical and emotional stress as they grieve the loss, plan the funeral, and attempt to distribute the estate equitably. It is helpful when the deceased leaves a detailed and up-to-date trust, will, and other directions such as beneficiary designations on retirement plans and life insurance.
However, in some cases, the most important items have little to no financial value.
As estate planning attorneys who often deal with estates worth considerable sums, we sometimes underestimate the sentimental value and significance of one’s tangible, personal property. A small dish that may appear to hold no value may also symbolically represent years of emotional support and comfort. A doll that appears to be in such bad condition that it should be tossed might also be the key to unlock memories of childhood joys and playfulness. That tattered doll might bring back the memories or those long-lost days of childhood, when they are needed most, in the midst of recent tragedy.
When you are assisting a family with their estate planning needs, it is essential to consider the smallest items, as those items may very well cause the biggest rifts. Though attorneys may objectively find it difficult to see the value in crafts stashed away in the attic, or an old box of children’s toys, we have a duty to give adequate consideration to these items and to consider what they might mean to a family that has recently experienced a loss.
As you work with families in planning their estates, it is important to ask the right questions in order to ensure the individuals’ estate plans cover such items. Prior to their passing, some parents may ask their adult children to claim things that have sentimental value to them, while others may simply direct which children get which property. The directions may be left in the will or trust. However, items such as furniture, clothing, jewelry, etc., can be included on an external list referenced in the more formal estate plan. The client can change this tangible personal property list without the more elaborate formalities required for a non-holographic will or trust. This also gets the client more involved in their estate planning.
If a sentimental item also holds significant financial value, such as a piece of valuable artwork, then families can designate the item to one child, and can reduce the child’s share of the remainder of the funds in a way that offers equivalent value to all children. Or, the parent can use the will or trust to direct the estate administrator or trustee to sell the item, and the funds can be divided among the beneficiaries. While an item of tangible personal property with significant financial value could be listed on the external list, in theory, in practice it would be better to list the item in the more formal estate planning documents.
Looking after the little things in the present can reduce the possibility of fights between loved ones in the future, after a death in the family.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
- The Magic of Grantor Trusts - September 19, 2023
- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - August 15, 2023
- Double Your Gifting with Spousal Gift-Splitting - January 11, 2022