A will is a document that specifies what to do with your assets after you pass away. In most cases it is recommended to have a will in place to ensure that your wishes are honoured and your assets are distributed in accordance with that.
“Asset” is really a broad term. It includes everything from your personal and household effects (“articles”), principal residence, investment accounts, to pensions and life insurance benefits.
The general structure of a will typically starts with leaving specific bequests. This can be very general where you simply state that you would like a specific item, or amount of money, to go to one or a number of specific individuals. This can also get more complex where you identify numerous bequests to kids, grandkids, nieces, nephews, charities and so on.
After the specific bequests, there is a statement that determines the division of the residual of the estate. Common examples of residuals could be to a spouse, siblings, children, or charity.
Many clients want to make sure that certain personal and household effects (“articles”) are given to specific individuals. An example could be a special piece of art that you want to go to your niece, or a collection of records to go to a friend who shared your love of music.
After a lifetime of accumulating valuable and sentimental articles, the list can get quite lengthy. It is possible to put all the specific bequests in your will, but your will could become very lengthy.
Additionally, if you want to add an item, change a bequest, or have disposed of one of the listed items, you will have to revise your will. Although this is possible, it can be a lot of trouble to go through for smaller articles and there may be a cost associated with these revisions.
An alternative to itemizing every specific small asset in your will is to have a separate document to deal with the articles. This document is called a Personal and Household Effects Memorandum. A benefit of using a memorandum is that it can be updated without having to update the will. The will would refer to the memorandum and exclude the small articles.
The memorandum approach can be very flexible. If you had some expensive jewelry that you wanted to give to a niece, you could either put this specific bequest into your will or into the memorandum.
If you want to change this bequest to someone else for any reason, then you will need to update your will or have a codicil (an addition or supplement that explains, modifies, or revokes an entire will or part of one) — both of which come at a cost. With a side memorandum, you would simply just change the article bequest to another person.
Having a memorandum enables your will to focus on the larger assets and enables your executor to have a clear understanding of how you would like some of the smaller articles with sentimental value to be distributed.
When we have discussed with clients about having a methodology to distribute the smaller articles in their house, we have heard many different approaches.
Some clients have indicated that they have put stickers underneath or behind each item, with names of the individual to receive each item. Over time these stickers can fall off, causing confusion.
Other methods that we have seen work in some situations are to distribute items during your lifetime. In the most likely outcome, you may downsize or move into an assisted living accommodation. This may be the ideal opportunity to distribute some of your items early.
The memorandum approach is preferred because it provides clarity for your executor by itemizing each article that you would like to be given to specific individuals. It can sometimes be the smaller items that cause family disagreements.
Ideally, the memorandum will minimize disagreements between family members over items of sentimental value and avoid unnecessary conflict. However, it is worth noting that the memorandum is not a legally binding document as it is separate to the will.
I’ve explained to clients how I use a memorandum and refer to it in my will. My memorandum was created using a password-protected spreadsheet template. The columns are: 1) Individual’s Name 2) Contact Address 3) Phone Number 4) Other Notes.
Although you may know where all the individuals who are receiving your personal articles reside, your executor may not know. It is helpful to put the address and phone number down to assist your executor. The ‘Other Notes’ column is really for additional comments that may include logistics such as shipping or customs notes if the individuals are not nearby.
A benefit of thisspreadsheet memorandum is that it can be easily edited when items are bought, sold, or disposed of without having to update the will.
If your executor has the electronic copy as well, then the list can be sorted by individual to make organizing the distribution easier. This comprehensive list of assets could be supplemented with photos/videos to add extra clarity for your executor and would also be useful to keep as a general record of all your assets for insurance purposes.
The spreadsheets should list all personal and household items of significance that are not specifically mentioned in the will. An up-to-date printed hard copy is always stored with my will and my will refers to this memorandum. I ensure the printed copy is signed, dated and also witnessed.
Just as we think it is important that a will be kept simple and straightforward, the memorandum should be kept to articles of importance, sentimental items, and other significant items. Many household items have very little value and are not of any great significance. It is also possible that the individuals that you wish to come into possession of the articles do not want them.
It could be that logistical issues or shipping costs of moving an item(s) to a named individual far exceeds the value of the article. Your will should give the power to the executor to handle these potential outcomes.
Kevin Greenard CPA CA FMA CFP CIM is a Senior Wealth Advisor, Portfolio Manager, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at timescolonist.com. Call 250-389-2138, email [email protected], and visit greenardgroup.com.
