One of the most important aspects of your estate plan is – or at least should be – protecting and passing on your legacy. And this coming holiday season is a great opportunity to reminisce about your family’s stories, values, and history because you’ll probably have your loved ones nearby.
While having those conversations is important, did you know you can also use a personal property memorandum in your estate plan to pass along special memories and stories about specific items that are meaningful to you and connect your family with the past?
What Is a Personal Property Memorandum?
California state law allows you to include a “personal property memorandum” in your estate plan. This supplemental document, specifically referenced in your will or living trust, lets you describe which personal property items you wish to leave to heirs, without having to call your lawyer and arrange for a meeting. You can handwrite or type this document, but it must be signed and dated to be valid. In conjunction with a will or living trust, a personal property memorandum can provide a roadmap for your executor regarding the distribution of specified items to your beneficiaries.
One important feature of a personal property memorandum is that you can change or update it whenever you like without the assistance of an attorney or notary. This freedom can be beneficial to you, because although you can also change your will as often as you like (and you absolutely should update it periodically to make sure it still reflects your wishes!), updating your will or living trust does require a visit to the estate planner’s office.
Another great reason to have a personal property memorandum in addition to your will and living trust is that your personal possessions likely change more frequently than other assets. For example, you probably add items to your closet more often than you add vehicles to your driveway.
What Can Be Included in a Personal Property Memorandum?
Not every asset can be distributed using a personal property memorandum! However, here are a few examples of assets that we commonly see people list in their personal property memorandum:
- Photographs and portraits
- Important certificates (birth, marriage, death, citizenship/naturalization)
- Collections (coins, stamps, dolls, figurines, etc.)
- Other family heirlooms
Taking Your Personal Property Memorandum to the Next Level
We include a personal property memorandum as part of each client’s trust plan, but more importantly, I always suggest being a little creative with the process. Instead of just using the legal documents to pass on valuable heirlooms, I encourage each client to take a picture of every item of importance and write two paragraphs on the back of each picture.
The first paragraph is the story of why that item is meaningful. How, why, and when was it acquired? What is the item’s history? Why is the item so important to you? The second paragraph is the story of why you chose that particular person to receive the item. Why is continuing that item’s story on through them so important to you?
The picture makes it clear which items you’re talking about so there’s no confusion. The two paragraphs transform the gift from the realm estate planning documents and legalese into that of heart and soul, making the gift that much more meaningful to the recipient, and continuing the story of the item for future generations just as you ensure the story of your connection to the item lives on.
Giving It Away Now Versus Waiting Until Later
One option you always have is to give personal items to your loved ones while you’re still alive. You can share with them the accompanying stories as you’re making the gift. Indeed, this in-person exchange is often the surest way to know your wishes will be followed. If you do choose to give away possessions during your lifetime, you must be aware of any potential gift tax consequences that could arise for items of a larger value. But, generally any gift or series of gifts, within the calendar year, valued at less than $14,000 (up to $15,000 starting in 2018) can be given without concern.
Remember, verbal wishes alone are insufficient to gift personal property after you’ve passed away. So whether you decide to hand down your prized possessions now or later, know that one of the best gifts you can give your loved ones is the story behind a personal possession that connects it with you and your family forever. A good estate plan not only protects your family financially, it also protects and passes on the stories and heirlooms of your life’s legacy.
Dedicated to empowering your family, building your wealth and securing your legacy,