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Estate planning: Ways of distributing personal property in the family
Anything that can be done to prevent, or lessen, such family contention is desirable for the family involved.
Let’s discuss the different approaches one might take.
One is to specifically gift assets individually to named beneficiaries. This entails inventorying them, taking a list of who gets what, and who takes in their place if a named beneficiary dies or declines to accept the gift.
Once made, that list can then be turned into a gift schedule and specifically incorporated into your trust or will – for legal effect by reference. Using an external gift schedule allows for revisions to be made without amending the underlying trust or will instrument and saves on legal fees.
Another approach is that your trustee or executor, as relevant, be put in charge of dividing the heirlooms when settling the estate. That still leaves the question of how the trustee actually divides the heirlooms.
One way is for the trustee/executor to be allowed to use his or her reasonable discretion to divide the assets. If you are confident in such person’s judgment and you aren’t concerned over possible abuse of discretion then all encompassing nature of this approach may be desirable. Of course, you can use different approaches for different types of assets.
Alternatively, you might devise a method to divide such assets. For example, the beneficiaries could each take turns selecting one object, and the order of turns could either be determined either using a lottery or age order.
This “taking turns” approach works well when there are numerous items of roughly equivalent value and you don’t foresee particular unhappiness. It can be used to divide those remaining assets which are not specifically given to certain individuals, or those that were declined. Any remaining assets can either be donated to charity or sold and the cash proceeds distributed to the beneficiaries.
For very special assets – such as a family diamond engagement ring – which you wish to give to someone upon attaining a certain age or happening of an event, like getting engaged, you can transfer the asset in a trust containing the necessary written stipulations. Avoid oral trusts as they typically create disputes and enforceability problems.
Lastly, many persons enjoy the personal satisfaction associated with giving their special objects to their loved ones, at the right time. Also, you are personally around to address any issues which such gifting creates. You can do this incrementally, however you like. Whatever you give makes settling your remaining estate that much easier.
Dennis A. Fordham, attorney (LL.M. tax studies), is a State Bar Certified Specialist in Estate Planning, Probate and Trust Law. His office is at 55 First St., Lakeport, California. Dennis can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 707-263-3235.
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