When people pass away, they generally leave property behind. What happens to this property can become the subject of long, expensive and nasty court fights. By some estimates, sibling battles over parents’ possessions break out nearly 80% of the time. Yes, this happens even in happy families where everyone gets along.
So what can be done to avoid a fight over your property? The answer is simple: decide who gets what before you pass away. Don’t just tell your children “I want so and so to have this when I’m gone” while you’re alive since that can easily escalate into a he-said she-said battle. Instead, the best way to avoid these fights is to write everything down. You can do this when you create your estate plan.
When you create your estate plan, you will need to think about who gets what. This might be the money in your bank account, your 401k, your life insurance policy or your house. These assets all have different rules regarding how the asset is transferred. But in addition to these assets, you also need to consider is who should get your tangible personal property. Tangible personal property includes items such as jewelry, silverware, china, antiques, stamp collections, baseball card collections, art work, furniture and furnishings. If there are specific people who you would like to receive specific items, you should document your wishes with a Personal Property Memorandum.
Why Can’t I Just Dispose Of My Personal Property In My Will or Trust?
You can. However, if you change your mind about who a certain item should go to, or if you acquire an item after you make your Will or Trust, you will have to meet with your lawyer to amend the document. To avoid this, Arizona law permits the use of a separate writing, a Personal Property Memorandum, to dispose of your tangible personal property not listed in your Will or Trust. You can change and modify your Personal Property Memorandum at any time without having to see a lawyer to amend your Will or Trust. This is especially helpful for people who acquire property after creating their estate plan that they want to give to a specific person. For example, there may be a specific piece of jewelry you want to leave to your child. To accomplish this, simply describe the item of jewelry in your Personal Property Memorandum, insert the name of intended recipient and sign your name at the bottom of the page. In addition, if at some point you decide you want to change who gets a specific item, you can revise or revoke your Personal Property Memorandum and make your desired changes without ever having to see a lawyer or modify your Will or Trust. Also, if you sell or give away an item during your life, you can revise or revoke your Personal Property Memorandum to remove the item. Simply tear up the old Personal Property Memorandum and make a new one.
What Types Of Items Can I List In My Personal Property Memorandum?
A Personal Property Memorandum can only be used for items of tangible personal property, like jewelry, collectibles and art work, as described above. Arizona law does not permit you to use a Personal Property Memorandum to dispose of items such as real estate, motor vehicles, boats, money, checking or savings accounts, certificates of deposit, promissory notes, evidences of indebtedness, documents of title, stocks, bonds, securities, property used in a trade or business, or tangible personal property items disposed of by your Will or Trust.
Also, common sense dictates that you can only give away items that belong to you. If you are married, keep in mind that you can only give away your separate property and your one half interest in community property.
What Does Arizona Require For A Valid Personal Property Memorandum?
First and foremost, you must have a valid Will or Trust. Without a valid Will or Trust which references your Personal Property Memorandum, your wishes may not be followed after you pass away. In addition to having a valid Will, below are some other requirements for a Personal Property Memorandum to be valid in Arizona:
1. The memorandum or list must be in your handwriting and should be signed and dated by you, or if typed or not in your handwriting, the memorandum or list must be dated and signed by you. Your signature does not need to be witnessed.
2. The memorandum or list must describe clearly each item so that a particular item will not be confused with any other similar item.
3. Your Will or Trust must refer specifically to your disposing of tangible personal property by a separate memorandum or list.
4. The memorandum or list may be completed before or after signing your Will or Trust.
5. The memorandum or list, to be effective, must be in existence at the date of your death.
6. You should identify clearly the beneficiary who is to receive each item by his or her proper name and relationship to you. If the beneficiary is not in the area, you should list his or her address.
7. Consideration should be given to naming an alternate beneficiary should the first beneficiary not survive to receive the property.
8. From time to time, you may change the beneficiaries or the items listed in the memorandum, and you may also revise or revoke the entire memorandum. However, NEVER make changes by marking or altering a signed memorandum, handwritten or typed. Changes should be made only by a new handwritten or typed memorandum and by signed and dating the new memorandum. After signing the new memorandum, the old memorandum should be destroyed.