Every Estate Plan has to address “Tangible Personal Property” that you own. Tangible Personal Property are assets that you own that you can touch and hold – furniture; appliances; clothing; jewelry; artwork; automobile; boats, stamp collections; coins; photographs; quilts; etc.
Here are some points I would like to make about your “Stuff” for estate planning purposes:
Household Items: When we are going through your asset list and we talk about your general Household Items (furniture, appliances, clothes, etc.) – for estate planning purposes – we are going to use an “Estate Sale” or “Garage Sale” value of those assets. For example all of the contents of your home might cost $100,000 to replace, but if you had to sell those items to liquidate them – my experience is you will get 10% on the dollar – if you are lucky. For that reason we would value your General Household Items at $10,000 estate sale value — not $100,000 replacement value.
More Valuable Items: I separate more valuable items from the general household items when I am talking to clients about their assets. Jewelry, artwork; coin collections, etc. may be worth a lot of money. During our initial meeting I just have clients give a ballpark as to the value of these items – but eventually we may need a formal appraisal to know the value for certain.
Not Valuable Anymore: Sorry to say – your Beanie Baby Collection; Hummels; and Longerberger Basketes are probably not worth as much as you initially paid for them. China Dishes and Silverware have also dropped in value. I have found that the younger generation — anyone under 45 years old – do not have China Cabinets anymore and don’t collect “things” like in years past. We are moving to more of a digital age with a “share” or “rent” economy – and less value is placed on ownership – especially for Tangible Personal Property.
A Probate Asset: Generally Tangible Personal Property is a “Probate Asset” – this is an asset that is owned by one person only and it does not have a beneficiary designation. Probate is a court Process of transferring assets from someone who has died to the heirs or legatees of their estate. Because of the time and expense involved, most people want to avoid Probate for their Estate. In Illinois, as long as someone’s total “Probate Assets” are valued at less than $100,000 – a Small Estate Affidavit can be used to transfer those assets out of the deceased person’s estate. By using a Small Estate Affidavit you can avoid the long Court Process of Probate to transfer assets out of a decedent’s estate. Many times the “Tangible Personal Property” of one’s estate will be over $100,000 in value – new cars, jewelry, coins, etc. can all add up. Here is an article I wrote on How to Avoid Probate for more information.
Using A Trust: About the only way to make your Tangible Personal Property a “Non-Probate Asset” is to set up a Trust for your estate plan and transfer those assets into the trust. Any asset held by a trust is generally considered a “Non-Probate Asset.”
A Source of Conflict: Even though Tangible Personal Property such as photographs, quilts, tools, furniture, etc. may not have much monetary value – they can have a very high sentimental value to them to your spouse, children and family members. I have had situations where there were hundreds of thousands of dollars sitting in an estate checking account waiting to be distributed, but the adult children where in court fighting over a few boxes of photographs and other family heirlooms. Because of the Emotional Attachment to these items you should think through who should inherit these items and how these items should be distributed to your family.
How to Distribute Tangible Personal Property: Every Will or Trust should have a section that deals with how Tangible Personal Property should be distributed. Some people are fine leaving this section general and stating that all of the Tangible Personal Property shall be distributed “to their children in Equal Share” as they see fit. Many times family members can work together to divide Tangible Personal Property; however sometimes that is not the case. In those circumstances I put language in the will that states that your Executor would make a final decision as to dividing up the Tangible Personal Property if your family cannot decide on how to divide them on their own. Another consideration is to make “specific bequests” in your Will or Trust. A specific Bequest is where you specifically state what person shall inherit certain pieces of property. I have had clients be very detailed in their specific bequests as well.
Conclusion: It’s easy to overlook Tangible Personal Property in your estate when putting together your estate plan. Based upon the discussion above, I would recommend everyone do an informal evaluation of your Tangible Personal Property to see what you have and what they would be worth. Identify the family heirlooms that you might want certain people to have and make those specific bequests in your Will or Trust. Finally, if you have over $100,000 in Tangible Personal Property – consider a Trust-based plan to have your estate avoid probate.