Estate Planning: How to Protect Family Treasures

Jewels and cash are visible through the open door of a small safe.

(Image credit: Getty Images)

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.

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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.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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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.