Estate Planning: How to Protect Family Treasures
Items like antiques, art and jewelry, as well as family photos, can carry huge emotional ties. The more specific you are in your plans, the better for everyone.
Do you have any special family treasures you hold close to your heart? Maybe your grandma’s wedding ring was passed down to you, or perhaps you have a special watch you want to keep in the family.
If so, you’ll need to create a comprehensive estate plan that ensures your high-value personal property, like the examples mentioned above, is dealt with according to your wishes. Any ambiguity in your plan, or any items left out, could lead to family disputes and costly legal battles.
Unlike other assets, such as brokerage accounts or even cash, how to deal with personal property left behind after the death of a loved one isn’t so cut-and-dried. Items like antiques, family photos, art or even jewelry carry huge emotional ties.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Let’s say you have a special Polaroid camera you plan to leave to your son once you pass. You’ve had a conversation with him about it, and it seems like everything is settled. After your death, your son is planning to receive the camera, but then your daughter decides she wants the camera, too. If you didn’t include the camera in your estate plan and list your son as the beneficiary, your daughter could take the matter to court, leaving the decision in the hands of the law. Not only could costly court fees deplete the value of your estate, but it could also deplete the relationship between your children.
Make a list of items you want to keep in the family
As you’re creating your estate plan, think about all the personal property you own that you wish to keep in the family and make a list of those items. Be as descriptive as possible. What does the item look like, where did you get it, and, most important, who do you want to receive it? This might seem strenuous, but any vagueness in language could be grounds for litigation. Once you have your list, be sure to update it throughout the course of your life. You may acquire new items that you wish to add, or you may decide to change beneficiaries as your life changes.
In addition to keeping and updating a list of these items, you’ll also want to get them appraised if applicable. This ensures you’ve gotten the appropriate values defined, allowing you to see how much a specific item is worth, which can help you further distribute and delegate items. Going back to the example above, let’s say the Polaroid camera is worth $1,000. To keep things equal among your children, you might find another personal item worth the same amount that can be given to your daughter. If you want to take it a step further, have a conversation with your loved ones about hiring an appraiser after your death. The value of items can change over time, so it’s important to be as accurate as possible.
Prepare the documentation
The next step is to draft the appropriate documentation to transfer these items. This can be done through a will or a trust. However, it’s important to note that there are different provisions for each. The biggest difference between the two is that a will goes into effect after you die, while a trust can take effect immediately after it’s created. A will is a legal document that provides instructions on distributing property to heirs after death. Trusts are legal arrangements that allow you to transfer your property to an account that is managed by another person.
Wills can sometimes be subject to a lengthy probate process and becomes public record after the testator dies. Assets in a will can also be subject to creditors and are subject to estate taxes. However, a will can be created for free, and you can do it on your own. It’s also easy to make changes as necessary.
On the other hand, a trust can be expensive to create and maintain and usually requires you to meet with an estate attorney to create and establish it. You’ll also need to take into account whether the trust will be revocable or irrevocable. A revocable trust allows you to maintain control over the trust, making changes during your lifetime as necessary. Since you’re in control of the trust, the assets will be subject to estate taxes once they’re distributed.
An irrevocable trust is the opposite. With these trusts, you give up control, and changes cannot be made unless certain criteria are met. By giving up control, the assets are no longer considered part of your estate and are not subject to estate taxes unless the value of your estate exceeds a certain amount. Right now, individual estates exceeding $13.61 million are subject to taxes, according to the IRS.
Regardless of how you choose to distribute precious, personal assets, the key is to have your wishes documented in clear detail. Determine what assets you want to transfer and consider meeting with an estate planning attorney. They can help you review your options and determine how to best transfer your assets according to your wishes and situation.
Pat Simasko is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Simasko Law is a separate entity and not affiliated with CoreCap Advisors. The information provided here is not tax, investment or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Patrick M. Simasko is an elder law attorney and financial adviser at Simasko Law and Simasko Financial, specializing in elder law and wealth preservation. He’s also an Elder Law Professor at Michigan State University School of Law. His self-effacing character, style and ability have garnered him prominence and recognition throughout the metro Detroit area as well as the entire state.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical Tension
The main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
By David Dittman Published
-
What's at Stake for Alphabet as DOJ Eyes Google's Chrome
Alphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
By Joey Solitro Published
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical Tension
The main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
By David Dittman Published
-
What's at Stake for Alphabet as DOJ Eyes Google's Chrome
Alphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
By Joey Solitro Published
-
Lowe's Stock Is Falling After Earnings. Here's Why
Lowe's stock is lower Tuesday as Wall Street weighs a beat-and-raise quarter against declining revenue. This is what you need to know.
By Joey Solitro Published
-
Why Walmart Stock's a Buy After Its Beat-And-Raise Quarter
Walmart is the best Dow Jones stock Tuesday after the retail giant's solid earnings report and outlook and Wall Street thinks it's just getting started. Here's what they're saying.
By Joey Solitro Published
-
Winners and Losers of Fed Rate Cuts
Navigating interest-rate changes can seem daunting, but these areas of the fixed-income market could perform better (or worse) than others.
By Jeffrey R. Kosnett Published
-
What You Should Know About Spousal IRAs
Without spousal IRAs, you would need an earned income to contribute to your retirement account.
By Sandra Block Published
-
Six Ways to Optimize Your Charitable Giving Before Year-End
As 2024 winds down, right now is the time to look at how you plan to handle your charitable giving. The sooner you start, the more tax-efficient you can be.
By Julia Chu Published
-
How Preferred Stocks Can Boost Your Retirement Portfolio
Higher yields, priority on dividend payments and the potential for capital appreciation are just three reasons to consider investing in preferred stocks.
By Michael Joseph, CFA Published