Handling Personal Property After Death

Stuff. As a society we like stuff. We like to purchase stuff, we like to use stuff, we like to store stuff, and then we die, yet our stuff remains. In legal terms the stuff is known as personal property. You may recall last month I discussed “dirt on the ground” which is legally known as real property. Anything that is not “dirt on the ground” is considered to be personal property, and must be disposed of, given away or sold as part of an estate.

There are several ways to manage all that personal property. The wisest way is to outline in a will who will receive certain items or what is to be done with personal property upon death.

However, many people when doing a will are focused on the larger items such as bank accounts, investment accounts, boats etc, and overlook the smaller items such as dishes, pocket knives, books and small items that can have a lot of sentimental value. Some of the most fierce family fights upon death will occur over these smaller items, and family members can harbor negative feelings for years. I would encourage anyone who is preparing a will to ask your children, grandchildren and anyone who is close, what one small item they would like to have. Then write it down and put it with the will. This way whomever is the personal representative will know your wishes and can make sure they are carried out, and that loved one will be able to have an item to cherish.

Or another creative way to manage those smaller items if you don’t want to take an inventory before death is provide in the will an order of who gets “first pick.” For example, you could have your children get first pick of one item that is less than $100 in value. Grandchildren get second pick of one item less than $20 in value. In each group, they can pick oldest to youngest, or whatever creative way you want to allow your family to pick through your things. The key is putting it in writing prior to your death so that it can be carried out upon your death.

Even after distribution of small items to friends and family there is always still a lot of stuff, which can be a challenge for a Personal Representative. The Personal Representative has a fiduciary duty to the estate to manage all the assets of the estate according to either the will or the statute if the individual died without a will.

Generally managing the assets of the estate means selling the assets off and banking the money into the estate account for later distribution to the heirs. Larger items, like cars, are generally easy to liquidate. It’s the small stuff like clothing, towels, dishes, books that can be difficult to manage. The Personal Representative is entitled to an hourly rate for the work he/she does on behalf of the estate. So, if a yard sale of these smaller items is likely to generate $200 and it will cost $400 in time for the Personal Representative to organize and conduct the sale, the estate loses $200 by having a sale. In that case, I would recommend that the items be donated to a second hand store that supports a charity. Many charities will come and pick up your items for free if you have a large load. In addition, this charitable donation can be used as a tax deduction for the estate, making it a “win win” for all.