If you have a beloved late grandmother, many images and memories may come to mind when you reminisce about her. Hopefully, if she had a robust estate plan, how she went about dividing her personal property wouldn't have come to mind.
Instead, you might picture her at her home or the family vacation house during the holidays. Your memory could be a special meal she only prepared for you or a place she took you to. Or maybe you remember a piece of jewelry she always wore—one that several family members are eyeing as you go through the personal property in her estate.
The little things in life can sometimes have sentimental and financial value. For these reasons, personal items of the deceased can often create controversy when it is time to divide up belongings, and there is no clear plan for who gets what.
Discussions about who gets the car, the house, the silver, the stocks, and other big-ticket items take center stage in an estate plan: people often spend a great deal of time deciding how their largest assets will be divided among their loved ones. However, small items, such as books or jewelry, can cause big disputes between family members, especially if more than one person wants the same thing, which is not explicitly accounted for in an estate plan.
Jewelry is a perfect example of something physically small but potentially worth more emotionally and monetarily than any other property or account in someone’s possession. By age 50, many women own over 150 pieces of jewelry. The likelihood of someone dying and leaving behind the jewelry is, therefore, relatively high.
Yet, while people usually remember the stories behind certain pieces, they may not know how much their jewelry collection is worth. Take, for example, a British woman who got an appraisal of a diamond ring that she purchased for $13 decades earlier at the UK equivalent of a yard sale, assuming it was costume jewelry. She learned it had an estimated value between $325,000 and $450,000. The ring later sold at auction for around $850,000.[1]
Stories like these are more common than one might imagine. To prevent future conflict among loved ones, jewelry owners would be wise to inventory the value of critical pieces in their jewelry collection and leave clear and legally binding instructions for how the collection will be divided.
Dividing personal property like heirlooms and jewelry, although individually small, can collectively make up a large part of a deceased person’s property. They may be treated as an afterthought and lumped together in a will or trust, with their distribution being addressed through what is known as a residuary clause or a remainder clause.
A residuary clause might simply state that whatever property remains after specific gifts have been made (i.e., the residuary estate) should go to a single person or be divided among multiple people.
However, this simple statement on paper can turn into a complex situation when there are competing claims for the same item.
When just one person inherits the residuary estate, an executor, personal representative, or trustee should not encounter significant distribution issues dividing personal property. That beneficiary receives Grandma’s ring and any other personal property that Grandma did not precisely gift to a particular individual. It is now their property, and they can do whatever they want. They can wear, reset, sell, or let the ring sit in their jewelry box.
Issues arise when the residuary estate is left to multiple beneficiaries. Generally, the residuary estate is a pool of assets without a clear set of terms for dividing that pot. Sometimes, the beneficiaries are tasked with dividing the personal effects among themselves; other times, the executor, personal representative, or trustee gets to decide.
Ideally, the beneficiaries can agree about who receives the ring and other property that does not have a designated beneficiary. Different items hold different meanings to different people. It is possible that each beneficiary has their heart set on a different item or set of items, and there is a neat division with no overlap and no quarrels.
In cases where more than one family member is interested in the same item, the best-case scenario is that they can reach a peaceful resolution, perhaps involving trading other sought-after items. Beneficiaries could sell the item in question and divide the proceeds equally if there is an impasse. Another option is for one beneficiary to buy out the other beneficiary’s interest in the item. They could also draw straws or flip a coin. The solution may depend on whether the dispute is over a single item, like a ring, or multiple items, resulting in a breakdown in the peaceful division of items.
Beneficiaries may look to the executor or personal representative of the estate or to the trustee of a family trust for answers. If clear instructions are not provided in the deceased person’s will or trust, the executor or trustee may have some discretion about how to carry out the decedent’s wishes. At the very least, they may be able to mediate to reach a solution. Executors or trustees who are also beneficiaries of the estate may have to proceed with extra caution to avoid conflicts of interest.
As for who gets Grandma’s ring—or her pie plate, antique rocking chair, or anything else that belonged to her and did not have a named beneficiary—heirs, trustees, and executors need to brace for the possibility of an unresolved conflict that escalates to a legal dispute.
Sometimes, the best strategy for dividing and distributing personal property is to give things away while the owner is living. Asking loved ones what they want in advance can give everyone—including Grandma—a voice in the discussion about what to do with her belongings. This can provide more options for dividing possessions fairly and equally, either in person or through a will or trust.
A thorough estate plan also goes a long way toward avoiding family fights over heirlooms and keepsakes. Without proper estate planning, the odds of a family conflict increase.
Our attorneys are here for all of your planning and post-planning needs. In addition to helping people plan for how they want their personal possessions to be distributed after their death, we can assist executors and trustees in administrating these items from an estate. Book a FREE Discovery Call to get started.
[1] Zahra Jamshed, Diamond Ring Purchased for $13 as Costume Jewelry Sells for $848K, CNN (June 8, 2017), https://www.cnn.com/style/article/car-boot-sale-diamond-ring-sells-for-847k/index.html.
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