Steps you can take now to help ensure family harmony long after you are gone
An elderly woman is getting close to the end of her life with an estate worth $800,000. She has four children and a living trust in place that states that each child is to receive 25 percent of her assets after she dies. The plan seems simple enough. She has a legal document and the assets are being divided equally. What could be the problem?
Well, it is very easy to divide financial assets evenly, but what about personal possessions and heirlooms? How do you divide a prized piece of art or some trinket with sentimental value? If you have not discussed these items with your family or indicated who gets what in your trust, I guarantee you are setting up your family for a battle and a great deal of hurt.
Here are some steps you can take now to avoid this kind of family turmoil in the future:
1. Create an inventory of personal property and family heirlooms
Make a list of all your personal property and heirlooms and ask your family if you have omitted anything. Sometimes family members will feel deeply attached to an old stamp collection that you have completely forgotten about. Make several copies of the inventory list and give to your family members.
2. Ask your family what personal possessions they would want
Have a family meeting to discuss personal possessions openly. If a family meeting is not possible, make contact with each family member asking them what personal items or family heirlooms have meaning to them. Make notes of the responses and be sure to inform everyone that there is no guarantee everyone will receive the items they requested.
3. Have your personal property appraised
Even if you have family members who say they don’t have an emotional connection to any particular item, they may be upset once the items are distributed, especially if they vary in value. I have seen households with one painting valued at $50,000 and everything else valued at $300 or less. If you can’t equalize the personal property between your kids, you can equalize with other financial assets. For instance, if one kid gets the painting, the other kids each take $50,000 off the top of the financial assets.
4. Set up a system to resolve disputes
If anyone’s disgruntled over specific items, have an involved relative vote on what they think is appropriate. This can also be the decision of the appointed executor. Or you can even do something like draw straws or roll dice to determine who will receive the item. Even if your kids get along, determine a process for resolving any conflicts.
5. Write a personal property memo
Keep an updated personal property memo and listing with your trust document. The memo should be as specific as possible in describing items and beneficiaries. This simple step can prevent a feud that could split a family for generations.
Take the time now to create this list. It is a loving and thoughtful gesture for your family and a gift more valuable than any item you own.