When a will or trust refers to a separate statement or list directing distribution of specific items of personal property, that separate document or list is often referred to as a personal property memorandum. In California, a properly prepared and referenced personal property memorandum is valid and can be a very helpful document in guiding your trustee or executor through the distribution of your estate. Many people leave their entire estate, including all of their personal property items, to more than one beneficiary in specific shares, without any further direction on how to specifically distribute items of personal property. This can leave a trustee or executor in a vulnerable position for arguments among the beneficiaries. In such a situation, consideration of a separate personal property memorandum is advised.
Why Not Just Identify Specific Bequests In The Will Or Trust?
Most practitioners will advise their clients to specifically identify personal property items of a large dollar value in their trust or will because these are typically just a few items and are likely to be retained by the testator. Smaller items of personal property, such as furniture, most jewelry, clothes, books, etc. are not usually advised to be specifically addressed in the trust or will documents themselves. One of the main reasons for this is that over the years the desired beneficiaries may change and these smaller items of personal property can be sold, lost, or gifted during life. This can lead to many revisions of a trust or will, which requires formal execution. Further, if there are many items listed in the trust or will that are no longer in the person’s estate, this could cause confusion and strife among the beneficiaries.
How Does It Work?
A properly prepared personal property memorandum will be specifically referenced in your trust or will and will be prepared in the testator’s own (ideally legible) handwriting and signed. No witness or notary signatures are required. The memorandum can be revised or replaced as often as the testator desires. This procedure coordinates with the fluid nature of ownership of most personal property items. The memorandum can refer to specific items or even categories of items and to whom they shall be distributed upon the testator’s death. You need to make sure that the memorandum is property coordinated, and specifically and accurately referenced, in your trust or will.
What Are the Benefits?
A personal property memorandum is valid and enforceable in California. Where heirs may have otherwise fought over what specific items of personal property should be distributed to them, a valid memorandum will direct the trustee or executor and discourage heirs from arguing or seeking court intervention. As indicated above, another benefit is that you can avoid having to continually update your trust or will as your personal property assets constantly change and/or your desires for distribution of such items change. Again, the use of such a memorandum needs to be carefully coordinated with your estate plan to ensure that it is valid and enforceable, but can be a very effective estate planning tool. Making smaller gifts during one’s lifetime is sometimes advisable as well, but tax implications must be addressed for larger value gifts.
For more information about personal property memoranda or any other estate planning issues, contact Darcie Colihan in LGC’s San Diego office.