Have you ever wondered what will happen to your sentimental assets when you pass away? This might be your grandma’s antique watch that you’ve cherished for years, or a beautiful piece of pottery that your partner gifted you on your wedding anniversary.
Look no further! In this guide, Trust & Will explores the treatment of sentimental assets and personal property in your estate. Keep reading to find out whether your invaluable belongings are subject to probate, how they are distributed, and various legal options that are available to you. We will introduce a few tools to better protect your property, such as personal property memorandums, that can make the journey much easier. Let’s get started.
Do sentimental assets go through probate?
In most cases, yes, sentimental assets do go through the probate process. Personal property, including household items and sentimental items, are typically treated as probate assets because they don’t have explicit or individual title.
Although personal property won’t always have significant monetary value, they can be sentimentally invaluable. Because of this, it is on the onus of the owner to take extra care to make sure any sentimental assets are marked.
For instance, how will your Executor know that an otherwise benign-looking bottle of wine is one you’ve been saving from your wedding day?
Further, you should take extra steps to specify how these sentimental items should be transferred to your heirs or other beneficiaries. Otherwise, they may be distributed by default based on general instructions provided in the Will or by state succession laws.
If an item is truly invaluable, then you should also consider leveraging tools to ensure they will go to your specified heir or even avoid probate altogether. This guide will introduce a few ideas later on.
How to determine assets that go through probate
The easiest way to determine whether or not assets will go through probate is to divide them into two buckets: probate assets and non-probate assets. Click here to read Trust & Will’s guide that dives into the topic of probate assets.
To help you begin sorting out probate assets from non-probate assets, answer the following questions (yes or no):
Is the property jointly owned?
Is the asset considered community property?
Is the asset subject to a Payable-On-Death (POD) agreement or other similar arrangement?
Does the asset have a beneficiary designation?
Is the property held in a Trust?
If you answered “yes” to any of these questions above, then it is possible that your asset in question does not have to go through the probate process. Instead, it may have a mechanism that transfers it automatically to a joint owner or named heir outside of probate.
Here are some common examples of non probate assets:
Assets held in a Living Trust
Life insurance policy with a named beneficiary
Financial assets that are registered with a Payable on Death (POD) form
Physical property registered with a Transfer on Death (TOD) form
Pension plan payouts
Assets that are distributed automatically to family members per laws in some states, such as wages or vehicles
If you answered “no” to all of the questions above, then your property will likely have to pass through probate.
Here are some common examples of probate assets:
Bank savings and checking accounts
Stocks and bonds
Vehicles
Business interests
Real estate (sole owner)
Household items
Personal belongings
Digital assets
If you own an asset that is determined to be a probate asset, then it will be inventoried, appraised, and distributed to a rightful heir under the supervision of the probate court. The specific process is determined by state law, so be sure to review your state’s probate procedures. For instance, some states offer an expedited probate process for smaller estates.
Examples of household items
In most cases, household items are subject to probate, regardless of their sentimental value or other significance.
Household items are named as such because they are typically stored within a home and represent everyday items and belongings that an owner uses. In other words, they collectively make a home a home.
Here are some examples of what most states would consider a household item for probate purposes:
Cutlery
Television and other home electronics
Furniture
Pots and pans
Collectibles
Decorative items
Clothing
Jewelry
Books
If you are at home right now, take a pause from reading this article and look around. All of the tangible items you see within the walls of your home likely fall into the “household items” category. Do you identify anything that is on the list above? Anything that isn’t on the list above? This is a helpful exercise to start thinking about what all will pass through probate by default and what you may want to set aside for special treatment.
Examples of sentimental assets
This brings us to the next part: sentimental assets.
In the eyes of the probate court, all household items and personal property are the same. They are simply probate assets that will be distributed in accordance with the decedent’s Will, or by intestacy laws that determine order of succession.
So what makes an asset sentimental?
Just like the way beauty is in the eye of the beholder, the sentimental value of an asset is assigned by the owner, as well as potential or future owners. Common examples of items with sentimental value include jewelry, photographs, collectibles, antiques, furniture, and clothing.
They aren’t necessarily valuable because of their financial value (although they can be), but because of the memories that are attached to them. Items of sentimental value can be highly subjective and arbitrary, making the division of these assets more challenging. You can easily split your bank account by the number of children you have, but you can’t do that with your grandmother’s necklace. What do you do if both of your daughters are vying for it?
As you might imagine, this creates quite the conundrum. Disputes over emotional and sentimental values aren’t uncommon. Not only can they lead to conflict among family members, court costs and legal fees from suits over these items can hurt your loved one’s inheritances.
It’s best practice to make these decisions ahead of time and protect these assets so that your loved ones don’t have to pick up the pieces after you pass away.
Valuation of sentimental assets for probate
When you go through the process of identifying sentimental assets in your estate, it’s also a good idea to make sure you know their market value. Probated items require valuation regardless, and specific item valuation becomes pertinent if there is ever a dispute. Further, it is often helpful to know the monetary value of an item when trying to decide how to fairly divide up your belongings amongst your heirs.
The method you use to assign property value will depend on the type of property, as well as the reason for valuing the property. If the reason is for the informal transfer of an item to one of your children, for example, or for probate purposes, then an approximate value will often suffice. It can be helpful to conduct a web search to find out how much similar items are being sold for, such as on eBay.
However, the true current market value may be required, especially when there may be a dispute or if the asset is going to be liquidated. Here, you may want to take the extra step of working with a professional appraiser.
Determining the inheritance of sentimental assets
Thus far, we’d discussed how it’s advantageous to specify sentimental assets in your household and designate who should inherit them. Otherwise, they may be grouped in with other household items and get distributed arbitrarily or by default. Further, not creating a plan for how sentimental assets should be passed on after your death could lead to family infighting, which is painful for anyone involved.
The next few sections will provide several ideas and strategies on how to transfer your sentimental property, including outside of probate, within probate, and neither.
Regardless of your method, you’ll still need to address how your sentimental property should be divided. This is a highly personal decision and will largely depend on your relationship with your heirs, as well as your heirs’ relationship with the sentimental items themselves. For example, you might have a granddaughter who always showed interest in your piano and thus you may want to bequeath the piano to her. Similarly, you might have cherished memories of reading your comic book collection to your eldest son and thus decide to bequeath the collection to them.
If you feel stuck, or feel like a decision might cause strife amongst siblings, you can also opt to create a system that removes the emotion out of the process. Here are some creative examples:
Create a lottery system where your loved ones receive a random order in which to choose items. You might even add a rule that they should redraw their order after each round.
Hold a private auction through which heirs can bid for each item and the proceeds go to the estate, of which the remainder is divided equally.
Siblings take turns in birth order; from oldest to youngest and then from youngest to oldest and repeat.
Transferring sentimental items using a Trust (outside of probate)
Some items can be so sentimental and invaluable that you may want to keep them outside of the probate process completely. Probate is a costly and time-consuming process, and thus many individuals who plan their estate prefer to keep as many assets out of probate as possible. There are methods of removing assets and property out of probate such that the law (and the public eye) never have to get involved.
One of the most popular methods of gifting items to family members directly rather than through the probate process is the use of a Trust. This is a fiduciary agreement through which ownership of an asset or an item is transferred to the Trust itself. Thus, it is no longer part of your personal estate and does not have to be probated. The Trust can specify who should inherit what, how, and when. This means that the Trust can also give you greater control over the manner in which items are distributed. For instance, maybe you have bookmarked your valuable watch for your child who is still a minor. You can specify in your Trust that the watch should be transferred to them when they reach a certain age when you feel more confident that they can take care of it responsibly.
Find out more how to use a Trust as a part of your Estate Plan here.
Using personal property memorandums (within probate)
If you wish to bequeath sentimental items using your Will, which will be probated, you may want to consider using a Personal Property Memorandum if allowed by your state.
Listing out specific gifts in your Will is possible, but the problem is, the list could get very long if you have a lot of gifts to make. Further, if you need to make changes throughout the course of your life, this would require you to redo your Will each and every time. This is a lot of time and effort for a small change.
The solution here is a separate document entitled a Personal Property Memorandum that is used in tandem with your Will. This document is used to list out and bequeath tangible personal items to your heirs. The only requirement is for you to sign it and refer to it in your Will. You don’t have to sign the memorandum itself in front of witnesses as you would with a Will, making it much easier to revise and update as you please.
Another benefit associated with these memorandums is that you can specify who should inherit what items. Typically, a Will is used to leave belongings to your children in equal shares. However, they also inherit the burden of figuring out how to divide your property amongst themselves, which can create hard feelings. Using the memorandum and creating clarity around their
Distribute personal property during life (neither)
Another creative solution to distributing sentimental assets is to do it during your lifetime. This means that the items won’t be included in your Estate Plan and you have no need to worry about transferring them to a Trust or including them in your Will.
You can be sure that your sentimental assets wind up in the correct hands because you are seeing to it yourself, which can also provide opportunities for meaningful discussions with loved ones.
Further, lifetime gifts can offer some tax advantages. The lifetime gift tax exclusion allows you to make gifts up to a certain amount each year without triggering a tax penalty. Making use of this rule can help you reduce the eventual taxable value of your estate when you pass away.
Handle probate with confidence
When it comes to sentimental assets, you are the only person who can ensure that they are handled with care. To any outsider, your prized possession can look like and be treated like any other old household item. Therefore, you should be careful to take action and create a strategy for how your sentimental property should be handled.
Trust & Will can help you prepare for and handle probate and beyond with confidence. At Trust & Will, we understand that navigating the probate process can be overwhelming– but we're here to help. Our plans provide clear, county-specific guidance and support from probate experts so you can stay on top of the process. Learn more about our probate offerings.
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