In preparing your estate plan, you have the option to make specific gifts to individuals or entities. A brief discussion of those options follows:
Making gifts as part of your estate plan – An Overview
As discusssed in other sections, some assets such as real estate or some financial assets can be transferred automatically to someone else upon your death by operation of law. Other assets that aren’t automatically transferred upon death will be lumped together with other assets in your estate and distributed by your personal representative in a probate proceeding.
If you want to make a special gift of a particular asset to a particular person or entity, there are generally two ways to do it. The first method is to specifically include gifts in your Will or Trust document. This method is less flexible in that you will need to amend your Will or Trust if you change your mind later or dispose of the item during your life. The second method is to create a separate written list of gifts you want to make upon your death, and refer to that list in your Will. The second method is more flexible but there are restrictions on the kinds of property that can be distributed using a separate written list.
Making special gifts or “bequests” in your Will or Trust document.
When preparing your Will, you have the opportunity to make special gifts of money or property to family members, friends, or other entities like an alma mater, church or favorite charity. These special gifts may be spelled out in your Will document itself. This works fine for many purposes, especially if the gift is of an asset that you are sure to still own at the time of your death, and you are unlikely to change your mind for any reason. Once included in your Will, you can only change or cancel the gift by creating a “codicil” (an amendment to your Will) or revoke your Will and create a new Will. Like the Will document itself, changes to a Will need to be properly witnessed or notarized in order to be effective.
Making gifts with a separate written list.
For added flexibility, some types of personal property may be distributed to beneficiaries through the use of a separate, written list. Minn. Stat. § 524.2-513 permits (but does not require) a Will to refer to a separate, written list that directs the transfer of tangible personal property if those items are not otherwise addressed by the terms of the Will. For lack of an official name, let’s refer to it as a “Tangible Personal Property List.”
To be valid, a Tangible Personal Property List must:
- be referred to in the will,
- be either in the handwriting of the testator or be signed by the testator, and
- must describe the items and the devisees (recipients) with reasonable certainty.
A Tangible Personal Property List can provide a lot of flexibility in making small changes to an estate plan after the documents have been created and signed. However, there are limitations, and it’s important to understand (a) what kind of property items can and can’t be distributed using such a list, (b) how to create a valid list that minimizes the potential for confusion or disputes.
Kinds of property that can and cannot be distributed with a Tangible Personal Property List.
A Tangible Personal Property List may be used to distributed many – but not all – kinds of tangible personal property. As used in this situation, the term “tangible” generally means that an item can be physically touched, and usually suggests that the item could be physically moved from one place to another. A list may be used to transfer a car, boat or other item- even if ownership of the item is evidenced by a title certificate.
A Tangible Personal Property List cannot be used to transfer real estate, stock or an instrument evidencing a debt (e.g. a promissory note) or investment, which are not considered tangible personal property. Also, under Minnesota’s probate laws, a list cannot be used to distribute money, coin collections, or property used in a trade or business (even if those items might be considered tangible personal property in other contexts).
A Tangible Personal Property List certainly does not need to dispose of all of testator’s personal property items. The list is intended to be used for only special gifts of significant or sentimental in situations where you feel that it’s important that an item go to a specific recipient, and the intended recipient would especially appreciate the gift.
Creating a list that minimizes the potential for disputes.
Following the rules for creating a list is important to ensure that the list will be enforced by the probate court. Keeping the list in a good place is just as important – it won’t be followed if the personal representative of your estate can’t find it or doesn’t know of the list’s existence.
1. Describe the gift item with “reasonable certainty.”
The statute requires that you describe each item and each recipient with “reasonable certainty.” Basically, you want to provide sufficient detail as needed to avoid confusion. Some basic tips are:
- Clearly identify each item so that it will be distinguishable from other, similar items. For example, “I leave my channel set ruby ring to my friend, Jane Doe.”
- Designate each beneficiary by name and relationship to you. For example, “I give my wedding ring to my daughter, Jane Doe; I give my grandfather clock to my grandson, John Doe.
No particular format is required to create a valid list so long as the statutory requirements are met.
2. Consider having items formally appraised
Before making you’re a Tangible Personal Property List, consider getting appraisals for an item if you are unsure of the item’s monetary value. This could of special importance in some situations where the testator wants to make a special gift of a high-value item, yet intends that the overall estate plan treat his or her children more or less “equally.”
3. Signing Requirement
Whether you create a Tangible Personal Property List in your own handwriting or print one out on a computer, you should date and sign your list using an ink pen. If printed out using a computer or typewriter, the list must be signed by the testator in order to be valid.
If your list requires more than one page, we recommend that you sign and date each page.
4. Store your Tangible Personal Property List with your Will in a safe place.
After making a Tangible Personal Property List, the list should be kept together with other estate planning documents such as a Will or Trust. This should help ensure that the personal representative of your estate will find the documents together after your death. In the case of a Will, both the Will and the Tangible Personal Property List will be filed with the probate court when your estate is administered.
5. Updating a Tangible Personal Property List.
A tangible personal property list can be changed at any time. In fact, it is a good idea to review your tangible personal property list about once a year to determine if anything needs to be changed. The list should be updated if you have given away an item on your list or if your intended beneficiary has died.
If you want to make changes to your list at a later date, you can. If so, we recommend that you make a completely new list, and shred or destroy your old list in order to avoid any confusion. A list that has been changed is more likely to be carefully scrutinized by your heirs, and a disgruntled heir might be inclined to challenge your intentions or mental capacity at the time you made the change. Similarly, if you created more than one written list and the lists identify different people as the recipient of the same item, the most recent list will control in the event of any inconsistencies. It may be difficult to determine which list is more recent if either is undated. To avoid confusion or costly disputes, creating a completely new list and destroying the old list is the best practice.
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Hennessey Law Office PLLC serves clients in the Twin Cities greater metropolitan area, including the cities of Apple Valley, Burnsville, Bloomington, Eden Prairie, Edina, Minneapolis, Prior Lake, Richfield, St. Louis Park, St. Paul, Savage, Shakopee, and other surrounding communities in Hennepin County, Ramsey County, Dakota County and Scott County.