If you don’t leave a list of who gets what after you’re gone, you could be setting your loved ones up for conflict. Here’s why including personal property in your estate plan is so important — and how to get started.
Why you need to include personal property in your estate plan
Even the tightest-knit family can experience relationship strain when it comes to divvying up items of high sentimental and monetary value, especially during an already-emotional time. Arguments over what’s fair, who was promised what, who needs the money more, who’s most attached to a certain item, and so on are extremely common when parents are no longer around to play referee and make the hard choices.
Clashes over money and items of sentimental value can severely damage family relationships, and no parent wants that for their kids. Dividing up property and including a list in your estate plan can help reduce unnecessary tension. It’s not just emotionally beneficial; it can also save your children considerable amounts of money. Attorney and trustee fees for dealing with these kinds of issues can be astronomical.
Types of personal property to include in your estate plan
You’ll want to include anything of sentimental or monetary value in your estate plan, along with whom you’ll be leaving your personal property. Common items include:
- Cars, boats, and other vehicles
- Decorative items
- Clothing, jewelry, and accessories
- Family photos
- Family heirlooms
- Digital assets like photos, videos, writing, etc.
Keep in mind that you can start giving away valued items now as part of an estate planning strategy, that may even have tax benefits. Every person may transfer up to $15,000 in cash or other property per person per year, meaning you can pass gifts of up to $30,000 value to your child and their spouse, tax-free and without affecting your lifetime gift exemption. This applies to grandchildren, too, so you can gift quite a bit now, free of gift tax consequences.
How to get it done
We won’t sugarcoat it — going through all of your stuff isn’t a quick or easy task, especially if you have multiple homes. It may not be realistic to inventory all of your items today, but make sure you start as soon as possible because you never know what might happen. It may be time-consuming, but the simplest method is to go through each home and inventory every item you consider worth passing on. Write down who gets what in your own handwriting, sign and date it, and send it off to your trustee. (You can always update it if you change your mind later on.)
When going through your items, feel free to leave out anything that can’t be resold or doesn’t hold sentimental value for any of your children — you don’t have to account for every single item. For example, you’d want to include your first edition book signed by its famous author, but you can leave out the paperback beach read you bought at the airport. Items like the latter can be stickered and sold at an estate sale with no issue (or you can keep it simple and just donate or toss any low-value items you no longer need).
A factor that can complicate this task: Knowing that your family might not be happy with how you choose to divide your items. It may be helpful to ask who wants which items so you can make sure you’re giving things to the right person and dividing things in a way that feels fair. If you’d rather choose yourself, let everyone know of your decisions ahead of time. Even if family members aren’t happy with your choices, knowing them will at least let them know what to expect when you’re gone.
If you’re not ready to jump right in, give your trustee a call (or get in touch with our Plante Moran Trust team if you need one!) A professional can help you every step of the way, from advising you on where to start, to guiding you through the family dynamics aspect of the task. The sooner you start, the sooner you’ll have peace of mind.