One of the many reasons a person creates an estate plan is to specify what should happen with their property when they pass away. This includes their personal property, also known as “tangible property”.
Tangible property is generally defined as personal items that can be touched, such as household furnishings, books, tools, artwork, collectibles, china, and jewelry. It may even surprise you that your pets and livestock are considered personal property. The value of tangible personal property may range from very nominal value to significant. And of course, personal property might hold the most value sentimentally to you and your loved ones.
If you have created a Revocable Living Trust, ownership of your personal property should be transferred into the Revocable Living Trust by a general assignment of property. This allows your personal property to be distributed without the probate process. You can use a separate writing to list the items and the beneficiary who should receive the item or you can list the item in your trust. We recommend listing it in your trust if you believe several people are going to contest or want the property to avoid any issue with the separate written instrument. However, most people do not have this concern and can maintain the separate writing on their own and update as they chose throughout the years. Another option is gifting the item during your lifetime. You can gift any asset with a value of less than $17,000 in 2023 without the requirement to report the gift to the Internal Revenue Service through a gift tax return. Gifting during your lifetime can be a great strategy, as you know the intended person will receive that asset and you also have the added benefit of seeing the recipient use and enjoy the gift.
There are a few types of personal property that require special planning. These type of items can be more complicated to transfer to your beneficiary so it is important to take careful consideration and speak with an estate planning attorney.
- Firearms. Some types of firearms require advanced planning if you own a weapon that is governed under the Federal National Firearms Act. These weapons usually include machine guns, sawed off gun, silencers and pen guns. However, many types of firearms do not require this additional planning so it is treated as personal property. You want to make sure the distribution of a firearm to a beneficiary is someone who can establish his or her right to receive and carry a weapon.
- Pets. Your pets are considered personal property even though many of us view them as extended family members. Many states have enacted laws permitting pet trusts which allow for money to be set aside and held in trust for distribution to the trustee or caregiver who is taking care of the pet(s) after your death. You may choose to compensate your trustee and/or custodian of the pet and it is important to think about what distributions from the trust should be made for end-of-life planning for your pets.
- Coin Collections and other Collectibles. Collectibles and valuable coins are considered personal property. If your collection is truly valuable, you will want to consider transferring it to a trust to avoid the probate process and also consider having it appraised so your collection will be inventoried resulting in a clear sense of the value.
Contact us at Sinclair Prosser Gasior to discuss your estate planning needs today.