Preventing family fights through a personal-property memorandum

When writing a will or revocable living trust, most folks focus on cash, land, and other investments. And with good reason. But after you’re gone, the hottest fights frequently focus not on these big-ticket items but rather on mementos, keepsakes, and other heirlooms—in short, personal property.

Why is that? For several reasons, some good and some not so good. On the sunny side, personal property often has sentimental value. Maybe dad taught you how to golf, so his clubs remind you of the hours that you spent on the golf course with him. Or perhaps a particular set of dishes were always used on special family occasions, memories you want to remember and a tradition you want to carry forward. On the darker side of things, personal property has a nasty habit of wandering off shortly after someone passes away either through out-and-out theft or because the taker believed that mom or dad would have wanted them to have the thing.

What is common about all of these scenarios is the risk of family conflict, especially for bigger families. For example, maybe dad taught all of your siblings to golf, so the clubs have sentimental value to everyone. Or maybe the clubs are now collector’s items, so one or more siblings want to cash them in rather than keeping them. And the same problems for the special dish set.

Bottom line: The more people involved, the more opportunities for things to go wrong. And whatever wrong that happens will cause especially hard feelings precisely because the situation is so sensitive.

Fortunately, you don’t have to plant seeds of conflict waiting to bloom after you die. You can instead leave your family with the gift of peace. The trick is to have a properly written estate plan.

Part of that plan normally will be a personal property memorandum, which is a stand-alone document saying what happens to your personal property such as jewelry, furniture, art, electronics, and collectibles. The memorandum is then expressly incorporated into your will or living revocable trust (depending on whether you’ve elected to use a will-centered estate plan or a trust-centered estate plan).

At this point you may be wondering why not just list the property in the will or trust? Why should I create an extra document that I might lose later? Good questions. And the answer is that a personal property memorandum is cheaper and faster to amend than a will or trust, so using a memorandum will normally save you money since people regularly update how they want to give away their personal property.

To see how, let’s compare the process of amending your will versus amending a personal property memorandum. If you make a list, etch it into your will or trust, and then want to change it, you’ll need to formally amend the will or trust. That process generally means calling up your lawyer, having them edit the will or trust, and then re-executing the will or trust with all the same formalities as the original. By contrast, if you use a personal property memorandum, then you can simply rip up the old memorandum and replace it with the current one. No lawyer, and no delays. But with that said, it’s usually a good idea to have the new memorandum signed, notarized, and witnessed to be on the safe side.

Once you have a personal property memorandum, it’s generally wise to make sure that your family has access to it. Sure, giving the document to your heirs can cause some heartburn if they dislike how the property has been divvied up. But, first, it’s better to have those conversation while you are alive and can talk it through rather than waiting until after you’ve died, at which point it’s too late to clear up misunderstandings and address hard feelings. And, second, the memorandum is useless unless it can be found quickly because most wills and trusts have language presuming that if a memorandum is not found within 60 days of your passing, then no memorandum exists. All that hard work down the drain.

In addition to making sure the memorandum is found in time, it’s generally a good idea to plan for a couple of other contingencies: An heir dying before you, and what to do with personal property that didn’t make it into the memorandum. In case of an heir dying first, the most common route is for the property to go to the heir’s kids or, if there are no kids, to the other heirs. But you’re free to make other arrangements. For personal property that didn’t make it to the memorandum, it can be swept into the will or trust. Or you can have the heirs follow a procedure for who gets what such as by having them draw straws and then pick in order until everything has been distributed. But, again, it’s useful to decide an advance.

All of this may seem like a pain (because it is). And to be sure, you don’t have to do it. But having no plan sets the stage for unnecessary and often bitter family battles. So, if you would prefer your passing to produce familial peace rather than war, develop a plan with a competent estate planner.

This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.