Passing on the family’s most prized & precious possessions can be quite precarious. The truth is, these items often involve much more than their monetary value. The emotional connection of sentimental value can expose some "irrationalities," even in the most practical. And I get it. It is difficult to decide what to do with the belongings your parents have built their lives around. Many of the items have a special meaning to them. Your mom’s kitchen table is not just a table. It is the memory of the love cooked up and served at that table. The major family decisions made at that table and so on. Now the homestead. Your parent’s house is not just simply a piece of real estate, but the memory of the wonderful times you spent there together. How do you put a value on that? The answer is the same for each… clinically and self-removed. Cold yes, but it’s the hard truth. In this post, I want talk about how handle a few of the more complex items you may face. Antiques, personal collections, a home, and try to make the process of dealing with them a lot easier for you. So, let’s dive in…
What shall we do with our parent’s antiques and collectibles?
If your parents are like mine, and have the dreaded collector gene, you might have a little more of a challenge than others. Just like other personal belongings, the items may have more of a sentimental than actual monetary value. And therefor, more of a perceived valuable to your parents, not necessarily even to you or anyone else. There are two ways to deal with this situation. You can decide to either sell the collection intact, as many collectors prefer, falsely believing the new owner will keep the collection together…. or split up the collection and sell the items individually. I tend to advise the later as the return for the family tends to be greater. There are a few rare exceptions.
If your parents have a collection that is very valuable to them, the most sensible thing to do is to have an independent 3rd party appraisal conducted. You need to know the current fair market value. I also think you’ll find, it can act like a buffer for you. It’s typically a dose of reality. You know, “The Facts” and, makes those sharing the news the bad guy or “the messenger.” Let them be shot…not you. They are the professionals.
In the event that an individual family member would like to have the collection, your parents can treat it in a similar manner as they would, any tangible personal property or assets. Adding it to the will is very important and can quell arguments later. Or at least litigation. Let’s just say it’s a lot less stress later if it’s documented now, then the family squabbling or having different recollections as to whom, was to get what later. Especially under the duress of the loss of a loved one. People tend to not act rational and understandable so. Your parents or loved one’s wishes in a will can additionally go as far as explaining the reason for the giveaway in case their property is not split equally. Sometimes, it is just that one sibling was chosen to curate the family’s heirlooms until they pass again to the next generation, and not about the money.
Let me circle back before the ADD kicks in…. There are collections that may require special attention. Kind of a broad brush here, but I think you’ll get it. I will call it “the money” or expensive things… you know, vehicles, trucks, estate jewelry, coins, firearms, musical instruments, and such. These are likely too important to even consider disposing of through a list of tangible personal property. Your folks should ensure that their legal advisor knows about these types of collections. Forming a general bequest plan for these is a great idea.
What shall be done about The Homestead or Vacation Home?
An ever-increasing number of families are setting up trusts or enterprises to own and run these properties.
Trusts. You can build a trust for the sole reason for claiming and running the property. The trustee would be liable for keeping the spot, settling taxes, insurance, and other costs, and making reports to the family from time to time. It's ideal to have an independent trustee, since naming a beneficiary as trustee could bring about more family issues.
The trustee will require some cash to cover the tabs. Preferably, your folks or their estate would subsidize the trust so the bills could be paid from investment income. All things considered, there may have to be regular evaluations from the beneficiaries, which could, obviously, present a wide range of issues: What to do on the off chance that one of you can't or won't pay? Imagine a scenario where some of you get the chance to utilize the property more regularly than the others do. And in that case, should the ones who utilize it more also pay more?
In certain states, trusts enjoy the interminable presence, however, in most, it's not as much as that, mostly around 99 years. This is commonly an issue just in case you are attempting to plan for the future generation too. Outlining for future generation likewise implies that somebody needs to subsidize the trust for future expenses.
Corporations and Similar Entities. The most widely recognized entity for claiming the family vacation property is the Limited liability company (LLC), albeit now and again corporations of different sorts could be ideal.
Basically, your parents or their agent could set up the LLC. Every beneficiary would get some segment of the stock, implying possession. The leading body of Governors would set up rules for the utilization of the property and withdrawal of investors or individuals, and furthermore carry out similar services a trustee would. Likewise, the board would evaluate the investors to make sure the LLC had the cash it required past any initial funds your folks would have given.
Following this strategy, it is essential to consider who should serve on the directorate or governors board. Would it be a good idea for it to be all the beneficiaries? Would it be advisable for it to be just the individuals who have a keen interest in the property? Or would it be better for it to be the ones who are most equipped for the job? The right response to all these queries lies in the ability of whatever group is chosen to be able to work toward an agreement smoothly, as opposed to being in constant disagreement with one another. If required, an outsider could be made a part of the group to avert halts.
The guidelines could define what to do in case any of the investors or members choose to back out, e.g., let other investors or members purchase those shares at an independently evaluated cost. Likewise, in light of the fact that these entities live until the members choose to end them, investors can undoubtedly pass on their shares to their kids and grand-kids.
The rest of the setups have their own benefits. For instance, specific sorts of trusts could let your parents, or a few beneficiaries utilize the property for the remainder of their lives and still keep it out of their estate.
And at last, if the property is situated in a state other than the one in which your parents resided, it's much more imperative to make arrangements in advance to ensure the estate won't need to be probated in more than one state.
Are you still awake ?
Anyway, there’s a lot in here and I hope you found some of it valuable. As I always say, get sound legal advice and an outsider’s perspective. Sometimes when we are too close to a situation, it’s hard for us to make sound decisions. I’ve seen so many family’s “torn apart” (okay that’s over dramatic) but I know you feel me. Avoid the rifts, tiffs, uncomfortable weddings & holiday’s by dealing with all of this upfront, open and honest now.
All my best…
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