Orange County Estate Planning Lawyer Blog
Typical situation. An elderly mom with two adult children, Sally & John, passes away with a house full of nice personal belongings (furniture, antiques, crystal and jewelry). Sister Sally lives with mom or in the same town and brother John lives 500 miles away. When mom passes, Sally notifies John but it takes him a couple of days to get into town for the funeral. Meanwhile, Sally picks through the personal belongings and takes for herself what she wants and doesn’t tell John about it.
What actually should be done but rarely happens. A Upon a death, the law requires that the deceased person’s personal property as well as money and real property be inventoried and accounted for. Whether it is a probate situation or a living trust situation (i.e. no probate because of there being a trust in place), somebody needs to pay immediate attention to the personal property within a day or two. It is a sad fact of life that I and nearly all other estate attorneys have observed that personal property often disappears without any trace unless steps are taken to preserve it. In the ideal situation, the entire house including the personal property is photographed immediately and then detailed lists are made, room by room, of what is there. Then, a personal property appraiser is hired to make a detailed listing of everything and appraise the values. Few people realize it, but there are professional appraisers. One resource is the American Society of Appraisers which can be found at http://www.appraisers.org/Disciplines/Personal-Property
What can be done to recover missing personal property? The short answer to this is that very little if anything can be done. This is the classic case of once the horse is out of the barn the remedies are few an ineffective. Theoretically, as in the example above, brother John can file a probate court petition against sister Sally but it is up to John and John’s attorneys to prove that Sally took the items in question. Unless there are photographs or written evidence created very close to the mom’s passing, John can’t produce evidence to prove (a) what the missing items were and/or (b) that mom still owned them at her death or (c) that Sally took the missing items. If John files against Sally she will typically deny any knowledge of anything. If it were money missing, then bank records can be subpoenaed to prove what money was taken and whose account it went into. Not so with personal property, unless the items are of significant value or are put up for sale in something observable such as Craig’s list. Because mom’s personal property is not typically on people’s minds in mom’s last days, not a lot of care or record keeping is done to keep track of what there is.
Also, there is not any record filed with any government agency about personal property. The best that maybe can be obtained is personal property lists given by mom to her insurance company. That is typically the case with some jewelry, but not much else.
Problems encountered in estate division. A person’s trust or will typically does not have detailed lists or instructions about personal property and who is to inherit it. The more typical wording just says to divide these items equally among the deceased’s children. It is then up to the estate administrator or the trustee of the person’s trust to (a) list out everything and then (b) appraise/value everything so there can be an equal division. If things are missing and some of the children believe that things are missing, then the administrator/trustee is stuck and can’t act unless he/she files a court petition for instructions as to how to divide up the personal property. Another issue is that in the typical estate there is a lot of personal property which has little or no value so everyone involved gets overwhelmed with detail and as a result sometimes refuse to deal with the personal property at all causing delays in the distribution of the entire estate/trust.
Suggestions as to how to minimize problems. Any will or trust should have as much detail as possible such as lists of specific personal property items and to whom they should go. Trusts which I typically prepare have lists and also a provision that the trust creator can at any time add lists or instructions about these items. Another technique used is for the trust creator to go through all of his or her personal belongings and place post it notes on each item as to who gets each item. This can be done at a family holiday gathering when all the heirs are present so it is clear to all concerned at to who gets what. Something else to do is for mom to just start giving away her various belongings before she passes. Another technique which I have written into trusts is after mom is gone to gather all the heirs and put a number on each item. Then the heirs go through a procedure where each one picks one item, then the next picks and item and so on until all the items are gone. This techniques eliminates the problem of having to divide things “equally” because to divide things “equally” there have to be values assigned and to do that usually requires an appraiser. Most people don’t want to bother with the time or expense of hiring an appraiser but in many cases paying an appraiser is a lot cheaper than going through court litigation procedures costing thousands of dollars to divide things up. Moreover, if you go to court over this, either the court will order an appraisal and/or each side will order an appraisal so you end up with two appraisal fees plus attorneys fees as well. Lastly, the heirs and estate administrators/trustees are far better off reaching agreements and compromises about who is to receive what personal property items.
Serious delays and legal expense can occur if people are not getting along. In this area of estate practice sometimes the tail ends up wagging the dog. I have seen disputes over personal property valuation can drag on for years which in turn has delayed estate closing and distribution. Sometimes heirs have their own notions about who should get what of the personal property and without a rigid plan in place. Trust creators can do their families a big service by being realistic about who is to handle the personal property division. Trust creators should not expect some miracle of siblings to get along who have not gotten along for years. I have seen many cases where the mom’s trust gives Sally and John as in the example above the right to jointly administer the estate or trust. Unless the lawyer builds in some kind of tie breaker or voting mechanism, Sally or John have to both agree on everything. If one disagrees, there is a standstill which can only be resolved by going to court. However, going to court is costly and time consuming and eats up the estate by spending of money for attorneys fees. I have seen may situations where after the parents are gone, long since buried sibling rivalries and dislikes surface their ugly head when it comes to dividing up the personal property and other items. This is not totally unavoidable, but careful thought and discussion needs to go into this when the trust and/or will is being prepared. That is easy to say but difficult to get clients to focus on in the course of estate planning. Often the personal property is considered (and usually is) a very small part of the estate so trust creators don’t want to think about it much and/or just assume it won’t be a problem. However, most estate attorneys have experienced situations where disputes over small things such as wedding rings and other jewelry with sentimental value can hold up estate and trust closings for sometimes years.
