Smart Estate Planning Tips: Tangible Property vs. Financial Assets

Safely storing personal property for a family estate is one of the things Closetbox does best. But more than storage itself, we wanted to let our customers know about some of the differences they may encounter when it comes to estate planning for tangible property vs. financial assets. Often, there are different personal, legal, and financial considerations at stake when it comes to these two different types of assets. You want to make sure your surviving family is provided for, and you want to be fair and equitable. Yet, how do you guarantee the transfer of various types of property in a way that best honors your legacy?

Documentation is the Key

We reached out to Randy Hooper, an estate planning attorney with more than 25 years of experience, to better understand these differences. He explained the big difference often comes down to documentation. Financial assets (pension plans, life insurance, annuities, savings accounts, and stocks and bonds) usually have plenty of documentation. Other than vehicles and real estate, most personal property does not have a title certificate or proof of ownership.

Hooper tells us, “This is both a blessing and a curse. Tangible personal property can be transferred to a beneficiary without the involvement of a government agency, bank or other third party. On the other hand, it is not always clear who owns the untitled item, or if there are more than one of a similar item, which item is to be transferred to which beneficiary.”

Create Documentation with an Estate Planning Attorney

Most retirement accounts, annuities, and life insurance policies allow you to include a beneficiary designation as part of the documentation. In contrast, a lot of people make too many assumptions about what their family already knows or else what a particular individual will do in the event of their death.

Hooper remembers one will, handwritten without the advice of an attorney, that read, “I direct my daughter to divide all of the contents of my house among my children and grandchildren the way we talked about. She knows what I mean.” In another case, two nearly identical diamond rings were described thusly, “To Alpha, I give my 1 carat diamond ring. To Beta, I give my 1 carat diamond ring.”

Needless to say, you better provide a lot more detail than this is you want to minimize the chances the will can be attacked in court. How much detail is enough? This is where we tell you to talk to a local estate planning attorney.

State Laws and Tangible Personal Property Memoranda

Many people hold onto the financial assets in their retirement portfolio for a long-time, while continuing to buy and sell tangible property. Most states allow a person to refer to a separate memorandum of tangible personal property in their will. This allows them to change the memorandum and bequests of specific items without changing the will or trust. Other states, like Tennessee where Hooper’s Nashville-based law practice is located, do not.

Even then, Hooper explains that you can still list specific property in a separate memorandum in Tennessee so long as it “meets the formal requirements of a codicil to a will (signed by the testator and two witnesses). The key is to clearly identify each item.”

Beyond identifying each item, this documentation should also address how the property is to be physically transferred. “In an estate where specific bequests of tangible personal property are involved, the will or trust should authorize the personal representative/executor to store, protect and ship tangible personal property items and to pay for the costs of storage, protection and shipping as a cost of administration of the estate.”

Use Storage with Itemized Inventory and On-Demand Returns

Our full-service storage enables our customers to send specific items from their storage units to any number of people who live in the local metro area. In other words, for every beneficiary who lives in the area, all the executor has to do is login to the account and select which items get delivered to which person/address. This digital inventory is not a substitute for a personal property memorandum in terms of legal documentation, but it does make it easy to match items listed in the will or trust to the actual items being stored at our local storage center.