One myth about estate administration is that the biggest headaches come from the “big stuff”: your house, bank accounts, or life insurance policies. The truth is, these assets can be relatively easy to plan for with title changes, deeds, and beneficiary designations before death. It’s your “small stuff” (a/k/a tangible personal property) that can have tremendous sentimental value and the potential to cause conflict and angst among family.
It can help to specify how your tangible personal property should be distributed upon your death. Lest you leave this responsibility to general provisions in your Will or (if you don’t have a Will) to intestacy. We’ll explore possible planning options for your tangible personal property and what may happen to those items upon your death.
Of course, we are a Tucson elder law firm, so we know the laws in Arizona. If our discussion of Arizona law does not apply to you, please speak with an estate planning or elder law attorney about your local rules.
Defining “Tangible” Personal Property
The law makes a sharp distinction between different types of property. Tangible personal property is your “stuff” that you can physically touch, pick up, and move around. Examples include furniture, clothing, jewelry, electronics, collectibles, fine art, vehicles, and pets. Yes, even your pets count as tangible personal property (though you don’t have to tell them that).
It is equally important to know what “tangible” personal property is NOT. It does not include stuff like real estate, bank accounts, stocks, trademarks, patents, and digital assets (such as passwords and photos, cryptocurrencies, and NFTs). These items are considered “intangible” and are handled differently.
The power of a personal property list
One of the best gifts you can give your loved ones is a clear roadmap for who gets what when you die. Arizona law allows you to create a separate “written statement or list” to dispose of your tangible personal property other than money. The list is powerful because it can be treated as part of your Will or Trust, yet you can change it at any time without a lawyer or notary’s help. For instance, if you come to realize that your grandson would really appreciate your “Birds of America” dishes, you may update your list accordingly.
To be legally valid, a list must meet a few requirements under Arizona law:
- Your Will or Trust must specifically refer to the existence of such a list.
- The list must be either in your own handwriting OR signed by you.
- The list must describe the items and recipients with “reasonable certainty.” So, instead of saying “my ring to my daughter,” try “my 14k gold sapphire engagement ring to my daughter, Jane Doe.”
We like to give our clients blank list forms along with their estate planning documents, though there’s nothing special or proprietary about it. You can make a list however you want – on an electronic Word document or the back of scrap paper. If you do prepare a list electronically, just be sure to print and sign it.
Tangible assets can hold tremendous monetary and sentimental value, making them a source of some of the biggest conflicts. Different family members may want the same item. And all can lay claim to the same item. Wouldn’t it be nice to avoid the squabble and promote efficiency in the process? This is the power of a personal property list.
If you decide to make a personal property list, you’d be wise to keep only one list at a time; shredding the old one if circumstances change or priorities shift. Multiple lists can cause confusion and disputes. If this proves to be too difficult to manage, it may be best for you to gift personal property during your lifetime.
Must I make a list?
No, you don’t have to make a list. Truth be told, many of our clients don’t. Instead of a list, your Will or Trust can include directions for distribution. That said, there are downsides to this approach. Suppose you want your kids to choose what they want. Well, that process could take considerable time and expense (especially if your kids live far away). Among the questions to address: should the estate pay for travel expenses? Alternatively, if you want your kids to have equal shares, the estate will have to value your items. This can take time, and the costs can add up.
A list can help maximize efficiency and control. If you find a list too cumbersome, however, consider giving your personal representative (a/k/a the executor) the discretion to decide. That would make their job so much easier. Or consider making gifts of personal property during your lifetime.
Are there other ways I can plan for my personal property?
You might consider an assignment, which can help transfer personal property to a revocable living trust during your lifetime. An assignment can be a great option to avoid probate or the need for a small estate affidavit.
Another benefit: an assignment allows one to use their trust to distribute items of tangible personal property. The trust can then specify which items should be distributed (and to whom) and what should happen to items not specifically listed or distributed.
For more personal property planning ideas or tips, feel free to listen to our podcast on the topic.
A final thought
Planning for your tangible personal property is a good way to show you care. Planning can also help avoid your “stuff” from becoming a source of hurt feelings. If you haven’t taken stock lately, spend a few moments around your home; maybe start with the living room. And make a personal property list if you feel so inclined. A few minutes today may prevent a lot of trouble and heartache later.
