George Carlin once said that the whole meaning of life is “trying to find a place for your stuff!” After years of administering estates and trusts, I have found that more problems arise with the question, "what happens to the stuff."
First, what do we mean by your stuff? Your stuff is generally your tangible personal property. Your house, itself, is not your stuff, it is just the place your stuff is sitting. Bank accounts, brokerage accounts, cash, limited partnerships, businesses, etc., are not stuff.
Your “stuff” is what you trip over. Your stuff includes the piano, which is big, but it also includes the metronome, which is small. It includes grandma’s diamond ring, which is worth a lot, and her costume jewelry, which is worth nothing. Your stuff is what you can hold in your hand, or at least lift (or try and lift) with both hands.
Clients almost always downplay to need to deal with their stuff. What clients often say is that their stuff is not worth anything, and their kids do not care about it. What I have remind clients is that it is not what your things are worth, it is what they mean, and it is not what they mean to your kids now, but what they mean to your kids right after you die. And while they are happy splitting money with each other (sometimes) no one wants half a chair, or half a bracelet.
An almost universal truth is that your stuff means more to your kids right after you die, than it means to them now (or will mean to them five years after you die). We have seen clients argue with family over everything from a snapshot to a Picasso, from a hammer to a compressor, and not even a functioning compressor! A parent’s death is often the last time, or so siblings often think, to even up the score with their siblings, or to keep a piece of a memory of their parent.
We spend time with our clients taking about what happens not only before they die, or how they get power over things in general to their beneficiaries when they die, but also what happens next.
Although some of our clients may prepare lengthy instructions on what to do with hundreds of specific items of tangible personal property, many of our clients are overwhelmed with the idea of preparing such a list. And quite frankly I do not think that level of detail as usually necessary.
We generally give our clients three general pieces of advice when it comes to what to do with their “stuff:”
- Things That Matter to You. If you care where something goes after you die, you should write it down in your Last Will and Testament or Trust. We sometimes call this the “Piano Clause,” since if a family has a piano, they usually only have one. Mom and/or Dad then must decide where it goes when they die. For many clients it is important that the piano, other musical instrument, tools, guns, or other items pass to a child will actually use them, take care of them and pass them on. So a client will often say that the piano goes to John, tools to Tim, and the guns to Becky. They do this so that a item will go to the child who will either benefit most from it, use it the most, or to whom it means the most.
- Things You Already Know Will Cause a Problem. Often the reason clients come to us is they are worried about how their kids will get along if they are gone or disabled. But even when your kids get along, there is often something you own that you know will cause a problem at your death. In that case, you want to make sure you deal with what happens to it ahead of time. If there is one piece of jewelry that everyone will want, one meaningless piece of furniture, one piece of bric-a-brac, it should be dealt with specifically ahead of time. The most important thing you can do for your kids when it comes to your stuff is to make sure they will not be angry, or fighting, with each other over that end table. If they are made at you, so be it, you are dead.
- And the Rest of the Stuff? After that, it is often enough to let your kids decide who gets what from what is left. But make sure there is a time limit, often 6 months, and a method (usually picking in turns) if they can’t agree. Sometimes clients will decide that if the children cannot agree, everything will be sold and the children will get money, or that they must "purchase" the items at an estate sale. One client indicated that if his children cannot agree after 6 months on who gets what, he wants everything to be sold and the money given to charity.
- Bonus - Where Did the Stuff Go? The stuff is also the place where much of the “mischief" of family members comes into play. After death the child named as the personal representative or trustee is often faced with the reality that his siblings have pilfered the house. Everyone had keys, no one is sure who was there when. And often one child will announce that Dad wanted him to have it anyway. This may not be a problem is that if there is a good record of the assets, and everyone truly is okay with what everyone else took. To the extent that an appraisal of the goods is necessary, it can be done in the hands of the distributee (that is the person who took them prematurely) or through other means acceptable to the appraiser. However this is often the circumstance where the disenfranchised child will complain or blame the child acting as the fiduciary the "loss" of the asset from the estate. What they usually mean is they are upset they did not get their share of the stuff.
Giving careful thought to what will happen to your stuff when you die, how your stuff will go from your house to someone else's, is an important part of the estate planning process.
If you want help, give us a call.