THE LEGAL WAY EPISODE 9 | PRESERVING FAMILY HISTORY: THE ROLE OF HEIRLOOMS IN ESTATE PLANNING

In today’s episode of The Legal Way, join Friedman Schuman estate planning attorney, Alex Gusikoff, as we explore a fascinating facet of estate planning – the significance of heirlooms. We invite you to deep dive into the emotional and legal aspects of including cherished family heirlooms in your estate plan. From sentimental keepsakes to valuable artifacts, we discuss the considerations, strategies, and potential challenges associated with preserving your family’s legacy through these treasured possessions. Whether you’re a seasoned estate planner or just beginning your journey, this episode offers valuable guidance on how to ensure your heirlooms are passed down smoothly to the next generation.

EPISODE TRANSCRIPT:

Alyson: Hi, everyone, and welcome back to The Legal Way podcast. My name is Alyson Layser, and I’m your host. I’m also the Director of Marketing here at Friedman Schuman. And today I am joined by a guest, Alex Gusikoff, who is one of the attorneys in our estate planning department. So, Alex, welcome. I’m going to let you introduce yourself quickly, and then we will dive into today’s topic.

Alex: Sure. Thanks so much for having me on. So, like you said, my name is Alex Gusikoff. I’m a recent Villanova Law graduate, and a member of the PA Bar as of October ‘22.

Alyson: Congratulations.

Alex: Thank you. So, I’ve been with the firm for a little over two years. I clerked with them while in law school and stayed with them after the bar. So, I’ve been involved in a state and trust administration for upwards of two or so years now. So yeah, dealt with seeing a lot, dealt with a lot already. Seems like a busy two years, but it’s been exciting. So yeah, I’m excited to dive into it.

Alyson: Awesome. Well, congratulations again. Very exciting. So today we are going to be talking a little bit about heirlooms and what that has to do with estate planning. I feel like at least in my experience, which I don’t have an extensive experience in estate planning, but my initial thought, at least when I first started working at a law firm, was estate planning means, you know, figuring out the different types of things that you want to pass on to family members and in my mind, a lot of those things were tangible, like jewelry and furniture and all that type of stuff. And I know that there’s a lot more that goes into it than just saying, oh, I want this family member to have X, Y, or Z. So, I’m excited that we’re gonna be diving into this a little bit deeper and just getting all the details and all the things, learning all the things about it. So, as we start off, first question for you. What are some of the most common family heirlooms included in an estate plan that you have seen or worked with clients on?

Alex: I think unsurprisingly, the most common heirlooms are jewelry. It’s like, oh gee whiz. That is usually the case, someone’s got an old engagement ring, or they’ve got different bracelets or something that their great-great-grandmother had. I’ve even seen different pieces of fine China or different types of dining sets or silverware, that kind of a thing. It’s interesting in talking to different generations, you kind of notice the importance of some of those heirlooms and how it transitions a little bit. I would say it might have been the case in previous generations that some additional types of items, personal items, furniture, cabinetry, your nice wood or some kind of cabinet or something you might, big bulky pieces of furniture that usually kind of expensive when you got them, and they last a long time. It turns out some younger people generally are not as interested in having the antique furniture or at least keeping a hold of it as opposed to selling it. But a lot of the jewelry pieces are usually more precious heirlooms, things that have a lot of sentimental value to people. But really, anything that you own, I mean, physical objects, those are all tangible personal property. And so those are all things that you want to dispose of. And if they’re important to you, you want to dispose of properly to make sure that you give those items to the persons that you want them to have. That’s usually the case, my favorite engagement ring to whoever, but often it’ll also be my entire dining room set to little Jimmy. Alyson: That’s so interesting, and it’s funny that you brought up the furniture and the differences in generations, because like we talked about before we hit record, I just recently moved, and as I was packing up everything, my grandmother, she was like, I have this old family table, “do you want to bring it with you?” No, one, it’s not really my style, unfortunately. But two, I don’t have room, and it’s been passed down through generations and generations. I think it’s like my great-great-great-grandmother’s table or something.

Alex: Good example.

Alyson: It’s kind of a shame, because I feel like passing that on, it’s kind of ending with me, because I’m like, I just don’t have any room for it.

Alex: It’s in a storage unit, and what am I doing with this, right?

Alyson: Yes. Yeah, it is crazy. But I do feel like, at least, maybe like the millennial generation have kind of maybe stopped with passing on things from their grandparents or…

Alex: I think it may simply have transitioned or taken a new form. There’s a lot of the items that would have been valuable and important to family members. They invested a lot or they meant a lot to the family. Those types of things have changed.

Alyson: Yeah, that’s true.

Alex: So, I know that many people, young people are of all ages have really gotten into different kinds of collectibles, different types of really, really niche items that they’ve got a little collection of. You could think of a stamp collection or something, but it’s much broader than that. You see the different types of industries have really blossomed. People have all kinds of collections of things that they might want to say, oh, I’ve compiled this awesome group of whatever. It can be, I think I saw it said in the previous pocket. I’ve got all of the best Pokémon cards and I want to give them to my kid. You know, I’ve spent years developing this or you know, my favorite action figures, you know, whatever it is. And that’s kind of the beauty of it is you have to remember what the purpose of your estate plan is, right? You know, obviously most of your estate plan it’s going to be dealing with all of your other assets. So that’s all your financial assets, you’ve got bank accounts, retirement accounts, houses, properties, everything else. But tangible personal property, which I might add, does include your vehicles. Those are things that you think less about usually because they’re of less value. It’s not some large account that I’ve got somewhere, but it’s the value of the things that I’ve collected. And that might be somewhat substantial, especially if things, like I mentioned, collectibles, a lot of those tend to appreciate quite a bit if you happen to hit upon the right market. I don’t know anybody in particular, but I’ve definitely heard of the boxed Barbie doll or the perfectly preserved Beanie Baby or whatever it is that someone finds, oh my gosh, great Aunt May had this awesome collector’s edition American Girl doll. It turns out it’s $10,000 or something. Crazy things have happened. So a lot of that I think can, it’s on the wayside, it can fall by the wayside for a lot of people in their planning discussions, and it only comes out either later or they fail to dispose of something and they made some kind of oral promise, they tell their grandkids, oh, this is gonna be yours one day, or this will be yours, and they don’t make any changes to their documents. So, I think that’s a good segue to lead into really what we try to do as estate planners to make sure that those really important heirlooms are disposed of properly. And the best way that we do that usually is in the wills that we’ll prepare, we’ll ordinarily include a clause that disposes of your tangible personal property. And so, for surviving spouse, for family members who are married and have a surviving spouse ordinarily, it’s just, you know, everything to my spouse. So, usually it’s at the second to die in the married situation where the dispositive provisions really matter. And we usually give a couple options. One of them is called the personal property memorandum. So, it’s essentially a piece of paper with a bunch of blank spaces and says, my name is blah, and in my will, I dispose of these items below to the persons listed below. And so, you can include any number of items that you care about and whoever you want to receive those items, my baseball collection to my grandson, Johnny. That is usually the best way to deal with specific devices of personal property. You can write in your will, I give a specific gift of my pen collection to Johnny, but it is a little bit more difficult to modify because you’re writing it into the substance of the document as opposed to an attached memorandum that can then be modified. It’s an incorporated by reference document. It says, I’ve got this other piece of paper over here that deals with it, so look at that piece of paper. And so, it’s a little easier to change that rather than the will itself. It’s also less expensive.

Alyson: Yeah, interesting. So, in doing all of that, that would really be the way that you would be protecting those heirlooms. Is there anything else that somebody could do with alongside that to maybe improve the protection or anything?

Alex: Absolutely. So, the number one thing is going to be, and this is more generally first day planning, but appointing an executor that you really, really trust. I mean, they’re fiduciary, they’re obliged to follow your wishes, but often the executor is given fairly wide latitude to dispose of your property, especially if you don’t say what happens to it. So, you know, a default provision may say something like, I give all of my property as listed in this memo. Anything that I don’t put in the memo, I give to my executor to dispose of it as he sees fit amongst my descendants. He can sell all the property and give the money to the kids. He can give individual pieces to who they want, invite everybody in and say, okay, let’s all do a round robin. You start and we’ll each pick an item or something. However, they want to, executors give them a lot of discretion. So, I would say the number one way is to make sure you appointed a trusted executor to deal with that property. The other thing you can do, and this is a little bit removed because you’re doing it during life and some people might, but gifting is often one of the best ways to preserve those pieces of property and make sure that they’re given to the person you want them to be given to. If you’ve got your collection or your ring or what have you and you want a specific person, grandchild, someone to have that, the best way to make sure they have it is to give it to them. So often, especially for property that doesn’t have some appraised value or some unknown value, it is fairly straightforward to simply make a gift and say, I’d like to give you this collection and I want you to have it. It’s important. You can explain what the sentimental value might be. So usually, if that’s an option and it’s something that can be done, I’ll often tell clients, listen, if making sure that this is given to a person that is really important, if you can do that during life, do that.

Alyson: Interesting. Now, why, or in your experience, why do you think some people maybe hold off on the gifting rather than they put it in their will instead of just gifting. Like why do you think some people might make that decision to wait until they’ve passed and people read their will to give them this heirloom?

Alex: Well, sometimes, especially in the jewelry case, it might be something that they’re still wearing. They’re still using, it’s part of what they have, it is theirs. So, they really love whatever they’ve got. They still stamp collect. They still are doing the coin collection. So, it’s still very much a part of their life, and they’re not quite ready to say, okay, I’m giving this away now, because there is a very strong emotional attachment often to these items. And there’s a very human and understandable emotional response to giving away your own property. And not to be too morbid, but we are talking to state planning, you’re anticipating your own death. You are saying, I’m going to die and you’re going to have this. That can be difficult for a lot of people to both come to grips with and to make a decision to say, I’ve got however many grandkids or kids that I have, I really want this one to have this item. There might be rifts within the family, which in my experience, it’s best to do that while you’re alive. Fighting over tangible personal property is and can be and often is a mess and really, really ugly. And, you know, that’s something that you definitely want to avoid, especially if, you know, you can anticipate there being some strife amongst family members, you know, as uncomfortable as that might be. You know, it’s definitely important to take the lead on that because it’s much worse, in my view, to let family members, you know, at risk, you know, rip at each other once you’re gone.

Alyson: Yeah, I can’t say again that I have any experience dealing with that, but I would agree with you with that point. So curious, so let’s say, you know, somebody has some type of an heirloom, whether it be jewelry or even something maybe more sentimental, like recipe cards that, you know, have been passed down through the generations, but, you know, they want their attorney to hold on to it. Is that possible for an attorney to hold on to something like this, you know, before the person does pass and it is given to family members?

Alex: So, you know, I would say it’s uncommon. You know, an attorney is probably not gonna wanna be in the position of being an escrow agent, which is what you’re describing, you know, that basically, you know, that you’re saying, here, attorney, hold this for me, an escrow, and keep it safe. You know, maybe some attorneys would want to do that, especially if you know them really well and there’s a good relationship or something like that. But generally, they’re not going to want to do that for the same reason that you wouldn’t want to hold on to somebody else’s valuable stuff because you don’t want to be on the hook for it. You know, what happened? I don’t want to hold your valuable jewelry that’s been passed down for five generations because I don’t know what could happen, you know, and I don’t want to be responsible for maintaining that. Some attorneys may choose to do that. But I would say generally that that’s probably a little more risk than they’re willing to tolerate. Also, not exactly something they’re going to be generating significant fees. They’re not operating as a safe deposit box here in the office, which I should say, and that’s a good point. There are banks and other financial institutions, safe deposit boxes. Those are often places where people will choose to hold property that’s of some significant value. I will say that while safe deposit boxes remain a good option and there are means to get in and access them following the death, some institutions are becoming less willing to hold onto valuable property in a safe deposit box. There’s potentially issues of insurance and insurability as to what items you can put into the box and what the insurance caps might be on the value of those items. So, it’s a complicated issue certainly, but safekeeping is often difficult. So, if you can do that yourself and you trust, you’ve got a safe or some fireproof, something that can keep those, that’s a good option. A safe deposit box is always a safe option. But to the lawyer end, I would guess that most are not too interested in holding on to family heirlooms.

Alyson: Good to know. So, if somebody is looking to protect some family heirlooms or they are starting to add this into their estate plan, are there any mistakes that maybe people end up making throughout this process that could be avoided? did ask for the assistance of an attorney rather than trying to do it themselves.

Alex: So, I think the biggest issue I’ll often see is if they’re usually in families with many members or many descendants, multiple kids, multiple grandkids, and one of them is selected to be an executor fiduciary, and there’s some other rift or strife amongst the family. And usually it will be when a person fails to dispose of certain items. You know, my grandmom’s favorite tea set, right? She doesn’t write in her will or in her personal property memo, my favorite tea set to my favorite daughter, Jen. It instead says all of my property to the executor to dispose of, to my descendants as he sees fit or as they may agree. Well, they may not agree. They may really get into a tussle about grandma’s favorite tea set, not necessarily because it’s worth something, although it may be, but because that was super important to them. And now there’s all these other kids who may not have the same relationship with each other that they did with the decedent. So, I think lack of planning is often the biggest problem. I might sound like a broken record, I come on this podcast. Every so often, I’ll say, you know-

Alyson: I was going to say, this seems to be a common theme.

Alex: You should make sure that you have an estate plan and that it’s up to date. But I’ll say that once, I’ll say it a thousand times, making sure that the documents that you’ve got together accurately convey your wishes and your intent, it’s paramount. I would say the lack of planning or simply being, I guess, too wishy-washy, you know, you say, oh, I don’t really know, I want this to happen, but I also want that to happen. You know, it’s often helpful, especially if you anticipate there being some strife amongst the family, to not try to placate and say, well, they’ll all work it out once I’m gone, right? I’ll give, I’ll just give it to everybody or they can all decide amongst themselves. Often, that hope is not, while well intentioned, doesn’t ultimately achieve what they want to achieve. And so often, making a decision, simply saying, you know, this is the person that I want to have this item and that’s the end of it. You know, it’s much more difficult to contest that was your wishes if it’s written specifically this is what I want to happen. I want this item to go to this person. You know, it’s much more difficult to refute that.

Alyson: Yeah. Absolutely. Have you found in your experience that, going back to the make sure you plan theme, that a lot of people when they are trying to split things up amongst their descendants, that there is maybe a lack of planning that could be avoided? Or do you feel like a lot of times people do come in with a set plan and they know what they want to go to, which person?

Alex: Well, I would say, you know, it’s tough because, you know, not every family has these kind of heirlooms or, you know, they don’t have any particular pieces of sentimental value. So often, it will simply, you know, be something like an estate sale or a clean out, right? You know, they say, you know, there’s all kinds of stuff that, you know, my parents had and I don’t want any of it. And I’m, you know, I’m the executor. I’m tasked with having to deal with all this stuff. I don’t know what I’m supposed to do with it. I’m just going to sell it and I don’t know who’s going to buy it because, you know, what am I going to become an eBay seller and I’m listing, you know, 10,000 different items all over the internet and sell them on Amazon or something because, you know, trying to get rid of mom’s ottomans and whatnot just gets unwieldy. The job of an executor is already enough. Having to do all that, it makes it even more difficult. So, you know, often, and there’s a number of different businesses, services that do this. They’ll simply come in and run essentially an estate sale. They’ll say, okay, here’s all the stuff that you’ve got. I’ll pay you X dollars and I’ll clean it out for you. Usually that’ll be done in anticipation of a home sale. Usually if someone either gifts a property that they want to then sell or they owned a property that’s then going to be put up on the market. Prior to doing that and prepping that for showing, the executor will hire a, I guess, lack of a better term, a clean-out guy. And they’ll go through all the stuff and usually give you some, obviously, significantly discounted relative, but that’s the service they’re providing. It is a giant pain to go through all kinds of different items. Think about all the stuff you have in your house. I mean, there’s just –

Alyson: You accumulate a lot over the years.

Alex: Especially if mom’s got nine brooms and 15 vacuum cleaners and all kinds of magazines stacked from 1995, National Geographic collection or something. It’s like, what am I going to do with all this crap? So ordinarily, that’s the way that it’s done.

Alyson: Gotcha. Very interesting. So, before we wrap up, do you have any examples from some of the clients and cases that you have taken on where maybe you could use it as a learning experience for some listeners? Is there anything like that you would like to share?

Alex: Definitely. Sure. So, there has been a couple cases actually that I’ve had to deal with family disputes over jewelry, you know, what items are there and how much they’re worth. Okay. And so, you know, often, you know, in this one particular case, there was some litigation going on and a dispute between, you know, the sons and the parent, and some of the sons and their spouses were investigating as to, you know, what pieces of the, you know, the personal property were actually still around and what was had. And they had a whole host of various pictures and ideas of what she had available, because in their mind they go, I know that mom wore all of this stuff. I know that she had all of this. Where is it? I haven’t heard anything. And I don’t know where all this property is. And I know some of it was worth quite a bit, you know, perhaps—and in this case, you know, it was the surviving spouse, it was the administrator—I think that, you know, they’re doing something nefarious with this property. I think they sold it or they gave it away or what have you. And so, you know, there was an extensive bout of back and forth as to, you know, locating the property, getting it appraised, having them inventory and, say, you know, match up different pictures and items and make sure that everything was there. And that’s, you know, that was an emotionally tolling process, because, you know, if you, as you can imagine, having to then go through the decedent’s personal jewelry and say, you know, remembering each item, you know, I know when she wore this, this was her, you know, this was her favorite, you know, band, or this was, you know, the set of earrings she wore here, you know, it was emotionally tolling, very taxing. And, you know, so I know that that—that’s something that—I couldn’t stress enough if you can avoid that by good planning. Step number one, be good planning. Step number two, if you’re lucky enough that you have a family that is well connected and has good relationship, you consider yourself fortunate. That’s a blessing in and of itself because often that’s, unfortunately, that’s not the case. You know, that situation was definitely a difficult one. And I know that there’s definitely been similar circumstances where you’re having to ascertain what jewelry was available. I mean, it’s—and I’ll say bluntly, it’s almost always jewelry. What jewelry is available, what—you know, especially if it was previously passed down, right? Great, great grandmother’s engagement ring. How much is that worth? Are we going to sell it? What are we going to do? I mean, it becomes, especially when there’s emotions and, you know, sentimentality attached, it is exceedingly difficult.

Alyson: Interesting. Now, one question for you kind of going off of that, is that something that you deal with, you know, if a family member, you know, inherits an heirloom, like an engagement ring, and they’re like, I think I want to sell this, is that anything that you deal with them? Or is that something that, you know, they just maybe mentioned, but then they kind of take that on their own and forward.

Alex: It’s a good question. So, the short answer is once it’s theirs, it’s theirs. So, they can do with it what they will. So, if there are specific bequests, this pen to you, Allison, once the pen’s yours, say great, thank you so much for the pen. Turns out, I like the money more. I’m gonna sell the pen. And because you own it, no one’s gonna prevent you from doing that absent some other kind of agreement that I don’t know about. But beforehand, especially if it’s directed in the will, then the circumstance can be different. So, often, someone might say, collect all of my personal property and then sell it and distribute the proceeds. So, I’m actually not gifting any of my property. I’m telling the executor, go get that cleanout guy sell all of my stuff and just lump it into my estate and distribute the money because I don’t have anything necessarily important to give away. I’m just going to give you the value of the stuff that I have.

Alyson: Okay. Very interesting. Okay. I didn’t really know that’s how that could all work out.

Alex: Yeah. That’s why we’re here, right?

Alex: So, you have a lot of options.

Alyson: You and all of our listeners, right?

Alyson: Yes. Yes, absolutely. So, it is nice, I guess, for people to know that they do have options. If they would want to have everything sold and lump that into their estate. That’s an option where their descendants could sell it if they would want, if it’s gifted to them or given to them. So that’s good to know. Interesting. I learned so much on these episodes. Is there anything else that you would like to share or anything else that you think could be really valuable to people listening about family heirlooms and the whole process before we wrap up?

Alex: I think I’ll just reiterate again the importance of disposing of your tangible personal property in the way that conforms to your intention. If you’ve got things that you want to give away, and it’s almost a slogan at this point, right? If you’ve got things you want to give away and people you want to give them to, you want to have a plan.

Alyson: I think you should get that on a t-shirt.

Alex: That’s a good one. That’s a good t-shirt.But that’s the crux of it, almost always. So especially in, as I mentioned, this new generation where you’ve got different kinds of important items, different kinds of personal items or collectibles that they care about, those are the new, I guess, targets of this as that evolves. And we’ll see where that goes moving forward as people in their interests change, the value of some of these things change, how important they are to individuals. People, maybe in a couple years, in 10, 20 years, people aren’t owning that many different pieces of nice furniture or what have you because they’re either not made that well and they fall apart and not worth giving away. That’s a frequent one, I think, from a generational perspective. Some old antique awesome wood cabinet that was made in 1920 and looks as good as the day it was put together, that’s substantive. That’s a real piece of furniture. If you got something on some website and then you put it together and it falls apart, no one wants your IKEA furniture. They just don’t they don’t want it. So, I think that change is going to be the biggest from generation to generation is what items are important, how many items are important, and what you want to do with those. So, I guess I’ll make a mention, and I had failed to I think beforehand, it’s not necessarily an heirloom, but I did mention your vehicle. Disposing of your vehicle is often something that can be a point of contention for family members especially if there are other young or adolescent children who may be in the position to be inheriting that vehicle or get to use it from mom, once she inherits the vehicle, or if there’s multiple family members that each have their own kids, well, I wanna get the car, and oh, I wanna get the car, and are you gonna take money for that car, or how’s this gonna work? That can be a source of tension as well. So, if you’ve got, and most people frequently, you have a vehicle and you wanna dispose of that, that’s important to include as well. It may not be an heirloom or something like that, but it can definitely cut down on some potential discord. In my estimation, if you can plan it all out and eliminate any strife, you’re in a great place.

Alyson: I love it. That’s really great. I had never really thought about vehicles being passed down either, so I’m glad that you brought that up. I’m sure other people that are listening are very happy that you brought that up, so they can add it in their estate plan.

Alex: Absolutely. My 2003 Corolla 2 is the one with the rolling window. I swear, I swear.

Alex: I love it. Well, thank you, Alex, so much for joining us and for sharing so much valuable information. I know I learned a lot and I’m sure everybody else did too. So, thanks again for joining us.

Alex: Sure. I had a blast. Thanks so much for having me.

 

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