Distributing Tangible Property: What Families Need to Know

June 2021

Executive Summary Who will become the primary decision maker — your spouse, a child or an advisor — through a • The distribution of tangible property — jewelry, power of attorney? If the primary residence is being art, furniture and collectibles — is typically sold to help raise money for assisted living or long- accomplished through a will or revocable term care, will there be other items that should also trust. Some states allow you to write a separate be sold? Having everyone on the same page helps memo or list, signed by you, that outlines the ensure that important caregiving decisions are distribution of your property; however, generally determined in a timely fashion while minimizing the the existence of the memo or list should be likelihood of family stress over “stuff.” specifically referenced in your will or revocable trust to be legally enforceable. We encourage families to discuss the ultimate distribution of nonfinancial assets across generations. • Nonfinancial assets can have both monetary An additional benefit of these discussions is that they and sentimental value. Failing to plan ahead for provide an opportunity to share stories about an the disposition of these assets may incite family object’s family history and significance, especially drama after you’re gone. with younger children — and to confirm the intended • Following a process — determining market value recipient wants it. and identifying heirs’ preferences — can help By proactively discussing these issues, a family preserve the family legacy and relationships can arrive at a meeting of the minds about the and help avoid conflicts following your death. disposition, including what will stay in the family and • The best outcomes result from proactive what should be sold or donated. discussion, as a family, during your lifetime. Decisions to make during one’s lifetime Opening a dialogue • Understand what possessions are worth. Having a Parents can be reluctant to discuss who gets what sound understanding of the approximate value when they die, and so it may fall on their children to of tangibles, especially jewelry, art and furniture, initiate the conversation. If that is the case, children enhances decision-making. Values can change may approach their parents with a “what if” significantly over time, depending on tastes conversation. For example, “If something happens and trends. Traditional mahogany furniture, for to you, are there specific items you have in mind for example, is generally much less valuable today each of us?” This can open the door to a meaningful than it was 20 years ago, while mid-century dialogue. modern furniture from the 1940s-1960s has risen in value. It’s also important to discuss your wishes should you become incapacitated. • Sell a collection. The person who built the the outstanding items have value, sentimental or collection is likely best positioned to arrange for monetary. Securing outside appraisals for probate its sale. They already know potential dealers, and tax purposes is a good step, and heirs should the history (provenance) and selling points and understand the valuation methodology. Heirs often even perhaps possible buyers. For example, an agree on dividing up the assets. avid book collector handled the negotiations When it comes to selecting from the remaining for donating her collection to a university pieces, more than one person may want the same library, a feat her children may never have item. This is when emotions tend to run high, so accomplished so successfully. Making the gift it’s best to have an orderly and established plan brought her enormous pride and spared her in place. When family members cannot reach an children the burden of determining what to agreement, keepsakes and treasures may need to do with a relatively obscure and potentially be sold. Discussing these issues with your children valuable collection. during your lifetime may help safeguard against • Heirs preselect items. Some families use color- any unpleasant surprises when it comes time to coded stickers on the underside of objects distribute tangible assets. to identify who will eventually receive them. A will doesn’t always specify which individuals However, beware: We have seen cases of will get which specific items of tangible personal stickers falling off with no other record to guide property. In those cases, decisions are made by the the family. Instead, keeping a record, perhaps executor working with the family. an album with photographs with an agreed- upon list of the items and recipients, may simplify Dividing remaining assets the distribution later. The following methods may be useful in dividing the • Identify in writing. Although a Letter of Instruction remaining assets: may not be legally binding in every state, a list • Create a spreadsheet or use an appraisal that of testamentary gifts signed by the owner makes lists all items. The heirs then indicate what they clear the intended recipients. want, and an objective third party, usually the Implementing a course of action after death executor, reconciles them. Although some families divide the items with relative ease, others Several actions occur following a parent’s death: may need a third party to manage negotiations. An executor is appointed, the assets collected, In some cases, the will or revocable trust may appraisals completed and perhaps a contract on direct items be sold if the family can’t agree on the sale of the residence(s) signed. When it’s time to their disposition. divide household items not specifically included in a will, the executor and family members will clean • Hold a family auction. Using equal shares of play out the decedent’s residence, focusing on the money, heirs bid for each object and the highest remaining contents. A key consideration is whether bid wins. This method can place a high value

2 on sentimental items and may result in an unequal Resources distribution based on monetary value. • Hall, Julie. The Boomer Burden: Dealing • Draw straws to determine selection order. This is with Parents’ Lifetime Accumulation of particularly useful in estates with large collections. Stuff (Thomas Nelson, 2008). The first round or two may reflect primarily • Stum, Marlene S. Who Gets Grandma’s sentimental picks, while later rounds adjust to allow Yellow Pie Plate? Workbook: A Guide some family members to make additional picks to to Passing on Personal Possessions achieve equal monetary value. (University of Minnesota Extension No matter the method, the most important outcome Services, 1999). is to preserve family relationships, honor your legacy, • Sullivan, Paul. “When Dividing Assets, the capture memories and amicably divide tangible Little Things Matter.” The New York Times, property. April 16, 2016.

Conclusion • Taylor, B. “Who Gets My Personal Stuff? Transferring Personal Property.” Talking about the disposition of tangible property can University of Wyoming White Paper. help effectuate your wishes and assure those wishes https://www.uwyo.edu/uwe/passiton/ are well understood by all family members. It also passingitonchapter7n-personalproperty. offers an opportunity for storytelling. Hearing how an pdf object was found during a special trip or inherited from a beloved ancestor can infuse it with emotional • “Transferring Nontitled Property — Who value, a legacy in and of itself. The best outcome is Gets Grandma’s Yellow Pie Plate™.” when a family appreciates their legacy, preserves www.yellowpieplate.umn.edu the memories and successfully divides the tangible property, while preserving harmonious relationships for years to come.

This presentation is intended to provide a review of issues or topics of possible interest to Glenmede Trust Company clients and friends and is not intended as investment, tax or legal advice. It contains Glenmede’s opinions, which may change after the date of publication. Information gathered from third-party sources is assumed reliable but is not guaranteed. No outcome, including performance or tax consequences, is guaranteed, due to various risks and uncertainties. Clients are encouraged to discuss anything they see here of interest with their tax advisor, attorney or Glenmede Relationship Manager.

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