Many clients have strong feelings about the disposition of some possessions. Who gets the family fine art, the Hummel collection or the jewelry? Perhaps a dear friend should receive the china or the grandfather clock. Likewise, many adult children have specific items they would treasure for sentimental reasons, and parents want to ensure they receive them. In addition, clients are often reluctant to leave personal possessions to children in equal shares for fear of fights as the kids disagree about who gets what.
In the past, a will has been the only legally binding mean of including these specific instructions. If there are multiple specific bequests, it can cause the will to get quite lengthy, and any changes require rewriting it or at least creating a formal codicil or addendum.
However, a possible solution exists for clients living in certain jurisdictions: a Personal Property Memorandum. This separate document accompanies the will, and allows clients to make extensive lists of who gets what and why. Heirs are less likely to fight or have hard feelings when the gifts and reasons are right there in the parent’s own words. Any tangible personal property can be included—furniture, vehicles, art, dishes, silverware, jewelry, etc. Real estate and intangible property, such as IOUs, copyrights, or stocks and bonds, cannot be included, as these are properly handled in the will. In fact, the personal property memorandum should not include items that are specifically bequeathed in the will so there are no conflicts.
Unlike the will, clients can change the memorandum as often as they wish without involving a lawyer, simply by rewriting, signing and dating it. (The memorandum does not need to be notarized, but notarization is a good idea to ensure authenticity. It is also a good idea to destroy previous copies.) The memorandum can be as long or short as your client desires, so even small or seemingly insignificant gifts can be named.
In 30 states, the Personal Property Memorandum is legally binding upon heirs, as long as the formal will refers to it. In the other states, although it is not legally binding, it is used as a guideline by the estate’s executor and can support a challenge from heirs. Those states include: Alabama, Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Dakota, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin and Wyoming.
Can you make your clients aware of this option? It may help ease their mind, prevent family feuds, and help them easily pass on their most cherished items in the ways they wish.
Amy Florian is the CEO of Corgenius, combining neuroscience and psychology to train financial professionals in how to build strong relationships with clients through all the losses and transitions of life.