The stories of estate beneficiaries fighting about money are a bit exaggerated. Usually it is clear how to distribute the money, the stocks, and the real property through the deceased’s will, trust or the North Carolina statutes that control if there is no will. In contrast, tangible goods create the most disturbing dramas as siblings become permanently estranged over the porch rocking chair that Grandpa sat in every night after dinner. The things become imbued with the spirit of the deceased and no one wants to give up that connection to the departed. What can you do to keep the stuff from splitting your family apart?
The easiest method for your beneficiaries is to give away the tangible goods before you die. If you are not still enjoying the items, then why not enjoy the thanks you will receive when you make a gift during your life? Certainly it is satisfying to watch the recipient’s pleasure in receiving the gift. If they receive it after you die, you will not hear the words of gratitude. As we like to say in my business, “It’s better to give than to bequeath.” You do need to consider gift tax issues for items of significant value and you should consult your lawyer or accountant to help you determine whether the gift needs to be reported to the IRS.
You may want to continue enjoying your things and prefer to address the matter at your death. If you include a list of items and recipients in your will, then the Executor will be legally bound to have the items appraised, distribute each item to each named person, and obtain a receipt as proof of delivery. The benefit of this method is the certainty that the person you named will receive the item. The drawbacks are the requirement of appraisals and the obtaining of receipts by your Executor from the beneficiaries.
If you prefer not to see your lawyer to put the list into your will, you can leave a Memorandum of Instructions, which is a separate document from your will, for your Executor to follow. The Memorandum can be a simple list of items and the recipients, and you can change it without the assistance of a lawyer. It should be signed and kept with your original will. Be careful not to use language that suggests it is your will and do not have it witnessed or notarized. You do not want to cause questions over whether you intend the Memorandum to override the beautiful will that your attorney prepared. Remember as well that you cannot use the Memorandum to direct any distributions of items with a title, such as your house, your car or your money.
If you are at a loss to determine how to divide up the goods, start by inviting your beneficiaries to tell you what items are of interest to them. You may well be surprised by their answers. An item that seems of little worth might be of hugely sentimental value to someone. You might decide that you prefer your beneficiaries decide who gets what after you are gone. In that case you could provide suggestions of methods for division of the goods in your Memorandum. Some processes that work include having the items appraised, totaling the value of the goods and assigning an equal share of the value to each beneficiary and then holding a faux auction. This method ensures that the person who wants the item the most receives the item. Another possible approach is to assign an order for choosing with the first to choose rotating among the beneficiaries.
Finally, remember that you probably know the most about your things and their history. A real gift is a record of the significance of the goods. You could do prepare a videotape explaining the history of the various items or you could leave a written summary of the history of each item that can be given to the new owner. If you die without passing on this information, it is likely lost forever.
If you address these issues while you can, the great divide of personal possessions will not divide your family. Wise beneficiaries recognize that things matter less than connections. Take steps now to inspire them towards fairness and love.
Originally published in Southern Neighbor, August 2009