It's one thing to make a plan to divide up your money. For the most part, you simply decide the amounts or percentages each of your beneficiaries will receive. Ultimately, after you've passed and your estate has been liquidated (house sold, cars sold, investment accounts divided, etc.), it's an easy thing to divide money among your beneficiaries. It's a simple matter of writing a check. One dollar is exactly the same as another. But that's just not the case with your personal possessions. What can you do with that?

You can't divide a ring into thirds. You can't split a family heirloom in half. Without a good plan, families can literally be torn apart over who gets what.

Before we jump into the discussion of how to handle the distribution of your tangible personal property, we should first define that term. One way to think of it is your “stuff.” Here's a more “legal” description:

3 Kinds of Property

There are 3 kinds of property:

1. Real Property - real estate and things “attached” to the real estate, like a house.
2. Intangible Personal Property - property that has no physical existence, but is representative of something with value (such as money in the bank, stocks and bonds, accounts, etc.).
3. Tangible Personal Property - property that can be touched, such as automobiles, coins, equipment, jewelry, furniture, electronics, tools, collections, and antiques.

In short, when we talk about how to handle your tangible personal property, we're talking about who will receive those things you own that can be seen and touched (and often picked up and moved). Especially important to address are those things that have no title showing ownership.

In short, when we talk about how to handle your tangible personal property, we're talking about who will receive those things you own that can be seen and touched (and often picked up and moved). Especially important to address are those things that have no title showing ownership.

Addressing Your Tangible Personal Property

When we help families administer the estate of a deceased loved one, we see that there are several types of tangible personal property:

• Things that you want to go to someone specific;
• Things that people want to keep for themselves;
• Things that no one wants specifically, but have a value if sold;
• Things that will be donated to charity; and
• Things that will be thrown away.

As you think about your personal property, think about what might fall into each of the above categories, and then make a plan for the first 2 categories.

Property to Go Specifically to Someone

For the items that you want to go to someone specific, it's best if you write it down. If you have one of our living trust plans, then you have a tab near the back of your Estate Planning Portfolio called “Personal Effects.” In that section, you'll find your “Memorandum for Distribution of Tangible Personal Property.” You can use that Memorandum to write down who gets which items of personal property. Your Successor Trustee will use that list to distribute those items of property that are specified.

If you have a Will, then each specific item of personal property that you want to go to someone must be written into the Will itself. This can be a little more burdensome, as whenever you change your mind your Will needs to be updated.

Property People Want to Keep for Themselves

We see the biggest potential for disagreements over the property that people want to keep for themselves. Unfortunately, you can't really know exactly what that will be. Rather than addressing each individual item you own, it's best to have a plan in place for how people will choose. Here are some ideas for your family to consider:

• Let everyone take turns picking one item. To be more fair, the order can be reversed after everyone picks. For example, if there are 3 beneficiaries, then in Round 1, they pick 1-2-3. In Round 2, they pick 3-2-1. The picking continues until there are no items that anyone wants.

• Have the executor/trustee get appraisals, and take turns “purchasing” items. They can take turns as described above. This can make things more fair if you have some very valuable items - whoever wants them will have to “spend” more to get them. They can even use fake money, like monopoly money or poker chips, rather than actually buying the items from the estate.

• Have an “Auction.” Rather than getting an appraisal (which can be expensive), the beneficiaries can hold an auction for the items. Everyone would start out with the same amount of fake money, and would bid for the items they want. This allows people to place their own value on items, and if they really want something, then they can outbid everyone else.

• Make copies of things that CAN be duplicated. For things like pictures and videos, a copy can be just as good as the original.

Too often the handling of personal property in an estate is overlooked, and too often, it is the biggest source of contention and fighting among beneficiaries. Make sure that you address your personal property in your planning.