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Leaving Tangible Personal Property for Loved Ones

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

In your estate planning documents, it is very important that you consider how your tangible personal property will be distributed to your loved ones after you pass away.  Tangible personal property is personal property that can be touched.  Examples of tangible personal property include automobiles, boats, motorcycles, jewelry, furniture, and sporting equipment.  Cash and bank accounts are not tangible personal property.  Here are a few ways to make sure that your tangible personal property passes to your loved ones in accordance with your wishes. 

1. General Gift in Will.  The simplest way to transfer tangible personal property is by your will.  In your will, you can leave a general gift of your tangible personal property to your spouse, children, family member, friend, or charity.  This can be done either to these individuals in equal shares or in some other variation.  You can also provide that your tangible personal property should be sold and that the proceeds should be distributed to these beneficiaries with a certain percentage being distributed to each of them.  Your executor is responsible for making sure that the tangible personal property passes to these beneficiaries or is sold with the proceeds passing to these beneficiaries. 

2. Specific Bequests in Your Will.  Another way for your tangible personal property to be distributed after you pass is by making specific gifts of certain tangible personal property items to your beneficiaries.  This specific bequest is stated in your will and provides that if that particular beneficiary is not living, then the property passes to an alternate beneficiary or passes as a general gift to a group of beneficiaries. 

3. Using a Memorandum or Placing Individuals’ Names on Tangible Personal Property.  This memorandum is not part of your will.  In the memorandum, you suggest that certain people are to receive certain pieces of your tangible personal property.  In addition, you could put beneficiaries’ names on your tangible personal property items.  You need to be aware that these two ways of passing your tangible personal property are not absolute and binding.  The only way that the memorandum becomes binding is if it is actually executed with the same formalities of a will.  That means that the memorandum is executed by you in the presence of two disinterested witnesses and both you and the witnesses sign the memorandum.  Even though the memorandum and placing beneficiaries’  names on the tangible personal property is not binding, if you believe that your family and other beneficiaries will follow your wishes, then this may be a simple way to transfer your tangible personal property.  However, if any beneficiary of your will has a problem with the memorandum or the beneficiaries’ names on the tangible personal property, then there could be a problem.  The result would be that the memorandum or beneficiaries’ names on the tangible personal property would be held to be invalid.  In that event, your tangible personal property would simply pass in accordance with the remaining terms of your will.

4. Transfer of Automobile or Boat by Use of Beneficiary Designation.  Another way to transfer your automobile and/or boat is to have the title to that item owned by you and another individual as joint tenants with right of survivorship or to have the title in your name with a transfer on death beneficiary designation to some other individual.  If that is done, then the co-owner or beneficiary, as the case may be, becomes the owner of that item upon your passing.  Please remember that if these items are titled that way, then these items will pass to those individuals despite what the terms in your will or trust are and the spousal rights in number 5 below do not apply.. 

5. Other issues with Automobiles, Boats, and Motorcycles.  In the State of Ohio, upon the death of a married individual, the interest of the deceased spouse in up to two automobiles that are not jointly owned, that are not transferred to a transfer on death beneficiary, and that are not specifically disposed of by your will, may be selected by the surviving spouse as his or her own.  The sum total of the values of these automobiles can not exceed $40,000.  For this purpose, an automobile includes a motorcycle and a truck if used by the family. 

In addition, upon the death of the married individual who owned at least one boat, one outboard motor, or one of each at the time of death, the interest of the deceased spouse in a boat, an outboard motor, or one of each, that is not jointly owned or otherwise specifically disposed of by the will or transfer on death beneficiary designation, passes to the surviving spouse if selected by the surviving spouse.  In order for the surviving spouse to take these autos and boats, the spouse must execute an affidavit at the title office, show a copy of their spouse’s death certificate,  and have the titles changed into his or her name in accordance with Ohio law.

6. Execution of a Trust.  Another way to have your tangible personal property pass to your beneficiaries is through the use of a trust.  This involves you executing a trust and then executing a bill of sale which states that all of your tangible personal property is owned by you as trustee of your trust instead of you individually.  Upon your passing, the terms of the trust control who the beneficiaries of your tangible personal property are and the spousal rights in number 5 above do not apply.
The moral of the story is that even though it may seen very simple to transfer your tangible personal property upon your death, the way they are titled, the terms of your estate planning documents and state law may create unintended results.  Please consult your estate planning attorney to help you prepare a plan that meets your wishes with regards to the transfer of your tangible personal property after you pass away.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

 
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