WSJ Your Money Briefing with J.R.Whalen 8/2/2023
Families often make mistakes when planning the transfer of heirlooms, resulting in unnecessary costs and family infighting. WSJ personal-finance reporter Ashlea Ebeling joins host J.R. Whalen to discuss actions families should consider to make the process smoother.
Divvying up heirlooms can be an awkward and frustrating process, but having a plan can avert a lot of family drama.
Ashlea Ebeling: Unspecific language in a will or trust can cause rifts. Also, not knowing the value of stuff, it’s often parents might have things and the kids know nothing about it or couldn’t care less about it, but it turns out they’re these really valuable things.
J.R. Whalen: We’ll talk to Wall Street Journal personal finance reporter Ashlea Ebeling after the break. When it’s time to distribute family heirlooms, planning the right way can help avoid awkward and painful battles. Wall Street Journal personal finance reporter Ashlea Ebeling joins me. So, Ashlea, let’s start with the big picture. A lot of the divvying up of family heirlooms is determined by what’s been stated in a person’s will. How does someone draw up a will?
Ashlea Ebeling: Well, typically you’ll work with an estate lawyer to drop a will and/or a trust, but it’s interesting, a lot of estate lawyers gloss over the stuff; the personal property is what it’s called in estate tax lingo. But make sure you talk to the lawyer about your stuff, not just bank accounts and real estates, but the jewelry, your collections, that kind of thing that you want to know where it’s going to go. Typically, a will would say, I leave my personal property to my spouse, if no spouse survives me, to my children to be divided as they agree or to be divided equally. But you can see right off with that vague language you’re going to cause problems.
J.R. Whalen: Yeah, when someone lists their heirlooms and who the recipients will be, is that legally binding?
Ashlea Ebeling: If it’s spelled out in the will or trust, yes, it is legally binding. And there’s also this great option in many states to leave what’s called a personal property memo. And on that, you literally list the things out with the item and who it’s going to go to, and make sure you sign and date it. If that’s incorporated into your will or trust, it will be legally binding. If not, it’s something the person handling your estate would take into consideration.
J.R. Whalen: So what are some of the biggest mistakes that people make when they’re dividing up their belongings among their heirs?
Ashlea Ebeling: So this unspecific language in a will or trust can cause rifts. Also, not knowing the value of stuff. It’s often parents might have things and the kids know nothing about it or couldn’t care less about it, but it turns out they’re these really valuable things.
J.R. Whalen: Who would determine what the value of heirlooms are?
Ashlea Ebeling: So in that case, you’d need to call on an appraiser. And I talked to this one woman, for example, whose late 98-year-old dad, he had lived in an assisted living apartment, and there was what she thought was a knick-knack on a kitchen counter. But an appraiser came in, and it turned out it was a sculpture by this Israeli-Canadian artist that was appraised at more than $4,000. That same appraiser had a son call him. He’d found this, what he thought was costume jewelry, under a bed in his late mother’s apartment. And that sold at auction for $15,000. It was a unusual gold cuff bracelet with these embossed jewels on it.
J.R. Whalen: Oh, wow. So the dollar differences between what you think it is and what it actually is worth could be a lot.
Ashlea Ebeling: Exactly.
J.R. Whalen: And what if that person is in line to receive an heirloom but they don’t want it?
Ashlea Ebeling: Well, then I would typically go back into the state to be doled out, however everything else is doled out. They could potentially accept it and then donate it and maybe get a charitable tax deduction if it’s just that you don’t want it but you’d like the value of it still.