How to Keep Your Heirs from Battling Over Your Things

When estate planners get together after work, inevitably they swap stories about the rancorous family battles over dividing estates they witnessed. Often, the worst estate battles are over items that seem of little or no value to outsiders.

Old furnishings or household items, seemingly meaningless memento and similar items often stir up deep conflicts among siblings and sometimes other family members. Such items often have far more emotional value than monetary value, especially when a loved one is gone.

Sometimes sibling rivalries resurface and the real goal is making sure the other sibling doesn’t obtain the item. It often seems the more worn and used an item is, the more valuable it is to loved ones. The good news is your estate plan can establish a process to avoid a permanent rift in your family.

Establishing a system for handling the personal property is an essential part of a good estate plan. The division of personal property can be difficult for most families, but it can be especially difficult when the surviving spouse is a stepparent to your children. Usually, it’s not best for a stepparent to be caught between the adult children and a parent’s personal possessions.

That’s when it’s most important for you to set up a selection process. You don’t want to itemize in your will the distribution of the personal items. That would create significant problems of its own.

Specific bequests in the will should be limited to valuable or important items. There are a number of ways to distribute personal and household items that estate planners have seen work successfully.

• Some planners recommend writing a letter or memo for the executor or survivors. The memo would list the personal items and how they should be distributed. The document won’t have the force of law, but survivors are likely to follow these last wishes.

This approach might work when there are relatively few items and they’re easy to describe. Otherwise, it would be too long, would have to be amended whenever you acquire or dispose of an item and it might be difficult to describe some property.

• Many wills direct the executor to distribute the items “equally.” But that vague direction often leads to the conflicts. Siblings can disagree on what is equal or fair because the sentimental value of the items is what matters to them. Sometimes the attorney takes possession of one or more items until the children reach an agreement, which can take years.

• There are appraisers who specialize in valuing personal property in estates, such as members of the American Society of Appraisers. You can direct that the estate hire one and that the executor distribute property among the heirs so that each receives an equal value according to the appraiser. This approach doesn’t account for the sentimental value of some property.

• The other extreme is to direct that the executor sell everything that can be sold and distribute the cash proceeds in equal shares. A survivor who really wants an item can buy it from the estate. But other heirs need to have an opportunity to bid and must be assured that the price to the heir is a fair one. Anything that can’t be sold is donated to charity or disposed of.

• A lottery and selection process works in many cases. Your children can draw numbers, straws or names to determine the selection order. In the first round, each child selects one item in the order deter- mined by the draw.

In the second round, the selection order is reversed. In the third round, the first- round order is used, and so on. When there are only two children, they can flip a coin to decide who selects first. The child to select first can choose one item while the child to select second chooses two items.

Or they can reverse the selection order after each round. An advantage of this approach is the children value the items through their selection choices. The value to an independent third party doesn’t matter.

• A variation is to have the children first decide the relative value of items. They would put items in one value range in one category, items of a lesser value in a second category and so on. The number of categories would depend on the number and composition of the items in your estate. In each round of the selection process, only items in one category are selected.

An alternative is to allow a child to select either one item from the highest value category or two items from the next category and so on. There are many ways to structure this selection process. Details depend on the number of personal items and children you have.

• An auction also lets the heirs decide the value of items to them. There are different ways to set up an auction. Each heir can be given the same number of points or the same value of toy money.

The heirs use these to bid on items. They can bid as much as they want on an item and bid on as many items as they want until they run out of money or points. Some families choose to have an open auction with bidding on one item at a time. Others prefer to have each person submit written bids for the individual items they want, submitting all the bids at one time.

An auction allows family members to talk and bargain before the bidding. They can learn who really wants particular items and decide not to get in bidding contests for some of them. In effect, they learn to cooperate by colluding and rigging the bids so everyone can end up satisfied.

Whichever process you choose to divide the personal items, most estate planners advise that only your offspring be involved. In-laws and significant others should not participate or view the process. But the best choice depends on the dynamics of your family.

Before choosing a method, it’s best to talk to your children individually. Ask if there are any items they’d especially want and why. Ask if the other children have expressed an interest in any items. Solicit feedback on different methods for distributing the estate.