Monday, September 9, 2013

Estate planning for stashes: overview (part 1 of 4)

Over at Reinventing Fabulous, there was a discussion recently about the various types of stashes we like to accumulate, and it got me to thinking about what happens to our stashes after we're gone. (It's not being morbid, it's thinking like a lawyer.) At one point, I had some collectible books that wouldn't seem valuable to a casual glance, but were in fact worth ten or twenty times the prices printed on them. My casual solution back then was simply to attach a note to them, advising anyone who cared to look, that they should not be tossed in the recycling bin.

The picture above is my stash of chemo caps, which aren't really a stash, but it just dawned on me that I ought to include instructions for where they should be donated if I'm unable to do it.

My main stash nowadays is fabric, mostly quilting weight. No single piece is terribly expensive, but the sheer quantity of the collection makes it reasonably valuable, at least to another quilter. Fortunately, the person named to handle my estate is aware of the value, and I don't have heirs who would have any sentimental attachment to it, so I don't worry too much about how it will be distributed.

But what can you do if the person in charge of your estate is less knowledgeable about your stash of fabric, yarn, books or whatever other tangible property you love? How can you make sure that the items go to someone  you know will cherish them, or will be sold for something approaching their market value?

One option, of course, is to list everything in your stash in your will. There are several drawbacks to doing that, starting with the fact that you'd have to update your will every time you added to, or subtracted from, the stash, and our collections are expensive enough without adding legal fees to every shopping expedition.

In any event, I've always been reluctant to include itemized lists in wills. For one thing, it tends to raise questions in the minds of people like the taxing authorities, the beneficiaries who distrusted the person administering the estate, and sometimes even the probate court employees. That means that if something was listed in the will, it almost always had to be formally appraised, even when the value of the item was less than the cost of the appraisal. It also tends to cause problems among rival heirs, when an item listed in the will had been given away or lost or sold before the testator (the person whose will is being probated) died, and inevitably, someone would become convinced that someone else had stolen it.

Until recently, however, in my state the only way to be as sure as humanly possible that an item would go to the right beneficiary was to specifically mention it in the will. That way, if the item went to the wrong person, the right person could go to court to demand either the item or compensation for it.  It wasn't an absolute guarantee, but it was a strong incentive for the person administering the estate to distribute the property to the right person.

My state's law also allowed for a "memorandum" for distributing items of relatively small value, separate from the formal will, but the terms of the memorandum were considered to be informal guidance for the person administering the estate, rather than creating a legal right that the beneficiary named in the memorandum could enforce in court.

In 2012, however, my state adopted what's known as the Uniform Probate Code (UPC) (although "uniform" is a bit of a misnomer, since my state, like others who have adopted the code, tinkered with it a little, so the version here is slightly different from the version in some other states).

A very nice provision of the UPC is Section 2-513, which, as adopted in my state, reads:

"A will may refer to a written statement or list to dispose of items of tangible personal property not otherwise specifically disposed of by the will, other than money. To be admissible under this section as evidence of the intended disposition, the writing must be signed by the testator and must describe the items and the devisees with reasonable certainty. The writing may be referred to as one to be in existence at the time of the testator's death; it may be prepared before or after the execution of the will; it may be altered by the testator after its preparation ...."

Stripping out the legalese, what that means is that, if your state has adopted the UPC or comparable laws, you can create an enforceable document, not included as part of your official will, that lists all of your stash (and other items like furniture and items of sentimental value) and who gets what. You can create the document at any time, before or after you sign the will, and you can change it at any time without having to go back to the lawyer's office for a new will. The memorandum doesn't need to be fancy, as long as it's signed, and the information is reasonably clear. There's no need for witnesses or a notary. Your representative doesn't need to file this memorandum with the court as a public document (unless there's a disagreement about it), which is a nice bonus if your stash is something that's at odds with your public persona.

One caveat: This memorandum won't be legally binding without a will that mentions it. The sample language from the creators of the UPC, to include in your will is this:

"I might leave a written statement or list  disposing of items of tangible personal property. If I do and if my written statement or list is found and is identified as such by my Personal Representative no later than 30 days after the probate of this will, then my written statement or list is to be given effect to the extent authorized by law and is to take precedence over any contrary devise or devises of the same item or items of property in this will."

In summary: if you want to be absolutely, positively sure your stash goes to the right place, and it can be described in its entirety or in some easily defined grouping (e.g., "all of my fabric/yarn/books" or "all of the wool yarn, but not the cotton yarn"), then it might be best to list it in your will, but be prepared for some additional administration expense for appraisals. If you want to be reasonably sure your stash will go to the right place, but you want to have more flexibility to divide the items or to change your mind, then, if it's allowed in your jurisdiction, consider a memorandum, that is referenced in your will.

Next week, I'll have some suggestions for the stash-describing language that your attorney could include, as appropriate in your jurisdiction, in your will, and the following week I'll have suggestions for using a memorandum in conjunction with a will. The final entry for the series will focus on the importance of communication when it comes to estate planning.

DISCLAIMER: As noted above, the UPC has not been adopted in all states, and even where it has been adopted, some provisions have been altered by individual states. The information here is not intended as individual legal advice, but is simply offered as information you can discuss when you consult a qualified professional in your jurisdiction, who can advise you with respect to your local laws and their applicability to your specific circumstances.

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