When it comes to making a will, most people have a sense of how they want to divide their major financial assets among their heirs.
But people often don’t put much thought into how to divide their personal property – particularly property that isn’t worth much economically but is rich in sentimental value, such as a wedding dress, a war medal, or a photo album.
And yet frequently it’s precisely this kind of property that causes arguments among heirs, and can lead to long-term resentments.
Discussions about who should receive what items can be very difficult – especially since the heirs may already be emotionally upset by their loss. A disagreement about personal property can easily lead to hurt feelings.
Also, it’s very common for a parent to promise a particular item to one child, then forget and years later promise it to another. When the parent dies, both children are expecting the item and believe they have a right to it.
It’s also common for one heir to begin removing property before the estate is fully accounted for –whether innocently or otherwise. Other heirs might perceive this as thoughtless or even unscrupulous.
The likelihood of resentment is even greater if there are stepchildren in the family.
What can you do? How can you prevent arguments over this type of property from arising?
One way is to make a list of who gets what personal property in your will – or in a separate list that is referenced in your will. This list can be updated as necessary
Ideally, parents should first have a conversation with their children about who should get what. Parents are sometimes surprised to discover which objects a child has a sentimental attachment to. This conversation also gives parents a chance to explain the history of various objects, so the stories behind the heirlooms are not lost.
Another way to reduce the squabbling is for parents to begin giving personal property to children before the parents die, so the items are not counted toward the estate tax. If you do this, you’ll want to make sure any such gifts are consistent with your other estate plans (so they can’t be challenged later), and that you’re aware of the gift tax, which applies if you give more than the applicable annual exclusion in a year to any one person.
In cases where the parents have passed away and the children are at loggerheads, there have been some creative solutions in recent years. One is a “round-robin” selection process, where the children get together and take turns selecting an item they would like to have.
Some families have actually held a silent auction, where the children bid on various items without knowing what the other children bid. The highest bidder gets the item and the winning bid is subtracted from that child’s inheritance.
In at least one case, the children held an online auction. Each child was given an equal number of “points”to bid with, and the children could use their points to bid on the items they most valued.