Contrary to portrayal in popular culture, you don’t need to revise your Will when you change your mind about which child should inherit your wedding ring/family china/Thomas Kinkaid original artwork. These types of items are classified as “tangible personal property” – a term that applies to anything that is not real property (dirt), funds held in a bank account, or cash. In Washington, a person can designate in a document that is NOT the Will who will receive specific items of their tangible personal property (i.e., stuff) by making a list of the items and the person who is the intended recipient of that item, then signing it and dating it. This means that the tangible personal property list can be updated without the same signing requirements as a Will.
A recent opinion decided by Division III of the Washington State Court of Appeals provides a delightfully readable illustration of how our state’s tangible personal property statute (RCW 11.12.260) operates. The case, In the Matter of the Estate of Betty Lowe, involved a dispute between two brothers, Aaron and Lonnie Lowe, over who was the rightful beneficiary from their mother, Betty’s, estate of a veritable treasure trove of silver bars and silver collector’s coins. Donald, Betty’s husband and Aaron and Lonnie’s father, had accumulated the silver over the course of many years. He hid it in various spots around the family’s home, including inside the fireplace.
After Donald died, the silver passed to Betty, and she asked her son, Lonnie, to help her disassemble the fireplace flume and remove the treasure. Eventually, Betty asked Lonnie to store the silver in a safe on his property in Olympia. Betty also executed a Will that left each of her sons an equal share of her estate. The Will also referred to a separate document that may include instructions for disposing of her tangible personal property, consistent with Washington law. In this separate document, Betty left instructions that all silver bars and coins were to be distributed to her son, Lonnie, “to distribute as he shall determine or to retain for himself.”
When Betty died, Lonnie was appointed to serve as personal administrator (i.e., executor) in the probate of her estate. And, following his mother’s written instructions as personal representative, he distributed all of the silver bars and coins to himself – and decided to retain them all. His brother, Aaron, who thus did not receive any of the silver, sued. The trial court upheld Lonnie’s distribution of the silver to himself, and required Aaron to pay Lonnie’s attorney’s fees. Aaron appealed.
While the Court of Appeals addressed several legal issues in its opinion, this post focuses on the portion of the opinion that analyzed written instructions for distributing tangible personal property. Aaron argued that the silver coins did not qualify as tangible personal property because, as currency or legal tender, the coins are excluded from transfer by a document separate from the Will. The Court rejected this argument, reasoning that the terms currency and legal tender refer to bills or coins used to purchase items of value. In contrast, precious metals and collector’s coins are accumulated for sentimental value or investment purposes. Here, the Court held that because Donald had paid a premium to accumulate a collection of relatively rare silver coins produced during a specific time period for investment purposes, the coins were not currency and therefore could qualify as tangible personal property. Many of Aaron’s arguments focused on the instruction that Lonnie could distribute the silver “as he shall determine” as an alternative to retaining it all himself. Betty may have believed that Lonnie would “do the right thing” and share the silver with his brother when she died. But he didn’t – and under the terms of the discretionary language that gifted the silver, he had no obligation to do that.
The Court of Appeals did show some mercy to Aaron by not requiring him to pay Lonnie’s attorney’s fees for the appeal, writing, “this treasure ably allows him to afford the expense of this appeal.”
While most folks likely don’t have an actual treasure hidden away in their fireplace, the case illustrates some important estate planning lessons that apply to metaphorical treasures of sentimental value, as well as literal treasures. It demonstrates how an estate’s distribution isn’t always fair. It also exemplifies how such an inequitable distribution can cause conflict. And, finally, it shows how human behavior is not always predictable – a distribution left to the discretion of another beneficiary may not play out in the way it was imagined.
How do you want to distribute your tangible personal property, so as to avoid these types of squabbles? Please ask us. We’d be happy to help!
Photo credit: KMR Photography on Flickr
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