I’ve recently been listening to an interesting podcast, and while there are a lot of interesting themes, I, of course picked up on the probate issue. Essentially, a man with some mental health issues (most likely depression) commits suicide after having told his intentions to leave his gold bars to non-family. After he passes, there of course is no will and the gold bars can’t be found.
Now at first, this was just a sad story to me reiterating the need for planning. When you have loved ones who aren’t legally related that need becomes even more important. In this case, it led to theft, charges of grand larceny, and just hard feelings. So please, encourage your loved ones to make a formal estate plan.
You’ve probably heard your own stories about similar situations. When I really began to think about it, the more interesting estate planning lesson here is regarding the gold bars. And the lesson applies not only to gold bars but any personal property: family heirlooms, guns, jewelry, tvs, etc.
You’ve heard the saying “Possession is nine tenths of the law” and I find that to be very true within estate cases. Personal property does not have a legal title. Instead, it’s owner versus owner. Each have to prove how they own it and often there is very little real proof. So it normally comes down to each’s word. And unfortunately, if someone illegally obtained something, they probably won’t admit it and may still retain possession.
To fix this, many people would like to put items in a will. However, you still have the first problem. If an asset disappears before the will goes into effect, then there’s nothing for the will to control. Just like in the podcast, when the gold bars disappeared, it wouldn’t have mattered if the will said otherwise. You also have a second problem of how a will is put into effect. As I’ve said many times, a will goes through probate. And for assets that do not require a legal title transfer, it is not worth the cost of probate to transfer assets that do not require probate. So listing the assets in the will is generally not practical. In addition, if you would like to change where the assets go, a new will is required. Again, just not practical.
Instead, I recommend one of three different options. The first two normally are not practical for most. Either lock the assets up or give them away. If the assets are restricted then all heirs can go through the property together and assets are less likely to “disappear.” Or if it’s important that an asset goes to a particular person, giving it to them in advance is a way to guarantee they get it.
However, for most of my clients, they are still enjoying their assets and still want access. So, the third option is what I advise most of the time. Make a list with your beneficiaries. If everyone is involved and everyone knows what should happen and has already had their say, then less is likely to go wrong. This doesn’t guarantee there won’t be theft or hard feelings, but it’s most likely the best option.
So, in addition to making a formal plan, discuss those personal items and make a list. Then talk about that list with your beneficiaries and make sure everyone knows the plan. The plan plus a little bit of transparency often makes the plan a lot more practical.