A recent article published in the Globe and Mail* estimates that over the next 10 years, Canadians will inherit an estimated One Trillion Dollars. As the author points out, it’s not just real estate, investment portfolios and cash that are being passed on by aging parents, but also piles and piles of stuff – what estate practitioners often refer to as personal effects. This includes big ticket items like cars, jewelry and artwork, and also articles of little or no monetary value such as well-used furniture, housewares, clothing, and often many boxes full of knick-knacks, personal mementos and “junk”.
Personal effects can be difficult to plan around. Often sentimental value far outweighs monetary value. Mom only has one engagement ring, after all. Where there are articles of significant market value, leaving them to one child over another can cause sibling resentment, particularly if the “favored child” has no use or desire for the gifted item. Intention can get murky too, especially if a parent disposes of an item after having specifically gifted it in their Will. “Dad left his 1987 Corvette to me, but he sold it a few years later and bought a newer model. Clearly, he meant that I should get that car instead.”
While children can and do fight over their late parent’s possessions, in the vast majority of estates I work on, sorting through mom’s “stuff” becomes an onerous, time-consuming, overwhelming task that could have been avoided had mom planned better while she was alive - think culling, purging and donating, and most importantly, having frank conversations with your children about which items they’d want to keep and which are better left for the dumpster. While these items may have special meaning to mom, a connection to a past time or a fond memory, it is often just “stuff” to the children. They may feel guilty about letting go of the item, especially if it’s something that has been in the family for a long time.
Here are some ways you can deal with your personal effects:
Gift it While You’re Alive. If you have jewelry sitting in a safety deposit box that you haven’t worn in years, why not ask your children and grandchildren if there is a particular item they’d like to have. Is your grandchild moving into their first home? Perhaps you can part with the extra set of dishes that have been collecting dust in your basement.
Purge, Sell and Donate*. Don’t assume your daughter wants that tapestry that was handed down to you by your mother, who in turn inherited it from her mother. Likewise, younger generations don’t have much use for china or crystal, no matter how beautiful or expensive it may have been.
Gift it Through Your Will. If you want to ensure that your wishes are legally binding, you must deal with the items specifically in your Will. You can leave specified items to a named beneficiary. For example, “I give my gold wedding band to my daughter, Jane Smith, if she survives me. If my said daughter predeceases me, I give my gold wedding band to my daughter, Jill Smith.” You can allow a group of beneficiaries to decide on the distribution. For example, “my trustee shall divide my personal effects among those of my children who survive me, in whatever manner they may determine.” It would be prudent, however, to include a mechanism for resolving disputes. For example, you could stipulate an order for the selection of articles, or a drawing of lots. You could also provide that if your children fail to agree on the division of any particular item, that item shall be sold, donated or disposed of and the proceeds of sale, if any, shall be added to the residue of your estate (that big “pot” of assets that gets divided). If there are items that have significant monetary value, you should consider whether a valuation and equalization is appropriate or whether the item should simply be sold. You should also address what happens if you no longer own the item at the date of your death or it cannot be located.
Use a Non-Binding Precatory Memorandum. While not legally binding, a precatory memorandum expressing your wishes as to the division and distribution of your personal effects, or some of them, can have significant moral persuasion over your beneficiaries. The advantage of using a non-binding memorandum over specifically gifting items in your Will is that changes to the memorandum do not require formal changes to your Will. This can be very useful if want to make frequent changes to the distribution of your personal effects.
Finally, we could all benefit from consuming less stuff in general. You know what they say about experiences over things!
* The great junk transfer is coming. A look at the burden (and big business) of decluttering as Canadians inherit piles of their parents’ stuff. The Globe and Mail, May 21, 2022.
** For any items that have appreciated in value, you should consult a tax specialist before disposing, selling or gifting it.
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