What Happens When Beneficiaries Disagree Over Personal Property?

Our previous post, Distributing and Disposing of Personal Property During a California Trust Administration, laid out the framework for handling a deceased loved one’s personal property. This post drills into the dispute side of that framework. As I wrote there, beneficiaries fight over Mom and Dad’s sentimental things far more often than they fight over the house or the brokerage account.

Before I get into ways to moderate a dispute over who gets your mom’s wind chimes — the ones she bought fifty years ago at a crafts fair in Monterey — let me offer some reasons I’ve seen over several decades for why siblings fight over these things. Understanding the cause of the tension sometimes helps ease it.

They Don’t Like Each Other. Or You.

It may be that the fighting siblings don’t like each other, have been fighting for a lifetime, and have simply moved the fight to the trust administration. There’s nothing really special about Mom’s wind chimes, but if one sibling wants it, then dammit, the other wants it too. No logic. Just historical animosity. Yes, it’s childish. But it’s also real.

This friction can also be directed at you. A beneficiary objects to every move you make for no justifiable reason other than the fact that he doesn’t like you.

Mad That a Parent Named You Trustee

We’ve seen this many times. Parents have several children, but one in particular has the specific set of skills to competently administer the trust. Often it’s the child who lives in the same town as Mom and Dad and has been helping them as they aged. But maybe that child isn’t the oldest.

That can upset the oldest child, who assumed he’d be the “chosen one.” This is silly thinking — serving as trustee is a lot of work. I sometimes describe it as “all the work with all the criticism.” The sibling whose ego was bruised because he wasn’t named successor trustee should be glad he doesn’t have to do all the work. But it’s hard for that person to see it that way in the moment.

Guilty That They Didn’t Help

Sometimes the disgruntled beneficiary is acting out because they feel guilty about not helping Mom and Dad as they aged. They watched you do all the work, they know they should have helped and didn’t, and now they need to posture — asserting rights or grievances unmoored to reality. They feel bad, so they take it out on you.

I had a case years ago where a mother had named her middle son, out of five children, as her successor trustee. He took care of her, helped run the family business as she became too frail to manage it, and made business and investment decisions that substantially increased the value of her estate. If he hadn’t stepped in, the business and the investments would have languished.

His effort meant every one of his siblings got a bigger inheritance. Were they happy about it? No. I couldn’t believe it — they grouped together to fight him on every move as trustee. They rejected his trust accounting and wanted to review every bank statement, utility bill, and receipt in detail. When we produced them, they didn’t even review them. They just found other things to contest.

At one point, I scheduled a meeting in my conference room with the trustee — my client — and his siblings, to look them in the eye and tell them their brother was doing a great job and their constant fighting was delaying his ability to close the administration and get them paid. It didn’t matter. They didn’t care. They wanted their pound of flesh. They were mad that Mom had made him trustee, and mad that he had helped her — with no recognition that he’d saved the family business and increased the value of the estate. They were jealous of his success, even though they’d benefited from it.

It got so bad that I told them their mother’s estate didn’t have to go through probate, since her trust was fully funded, but I’d recommend the trustee file a petition to move the matter into probate anyway, so a judge could take over. That’s what happened. The administration finally closed a year later, in probate, after more than $50,000 in probate fees. They wouldn’t let the trustee do his job, so a judge had to step in.

Thanks for the Psychoanalysis. Now What?

Most trust administrations we’ve handled — many hundreds of them — go smoothly. Don’t assume yours will be difficult just because you’ve read this far. Chances are it won’t. But if things do get out of hand over the wind chimes, here are some suggestions from the trenches.

Follow the Trust Terms

The living trust may or may not have provisions about who gets the personal property and how it should be allocated. If it does, follow them. That’s your defense if someone complains — you’re doing your job by following the trust’s terms.

In most cases, though, there’s no set protocol for allocating personal property. The trust simply gives you, as successor trustee, the authority to act reasonably and fairly.

Here’s the provision we typically use in our living trusts:

…the Trustee shall distribute the property to our children in shares of substantially equal value, to be divided among our children as they agree. The Trustee may use a lottery, rotation system, or any other method of allocation to determine the order of selection and distribution of the property. As an alternative, the Trustee may sell all or any portion of the property and distribute the net proceeds equally among our then-living children and any then-living descendants of any deceased child or children. The Trustee will not incur any liability to any party for decisions made by the Trustee with respect to the division or sale of tangible personal property. Any decision made by the Trustee will be final and binding on all beneficiaries.

Don’t Let the Squabbles Derail the Big Moves

Put personal property allocation on a separate track from the main assets. By the time you get here, you should already have completed a trust inventory identifying and valuing everything in the estate — use it as your checklist. You’ll still need to clear out the house to get it ready for sale, and if it’s the family home, there will be a lot of accumulated stuff.

If there’s a lot of furniture and other possessions, you may need to rent storage space to get everything out of the house so it can be prepped for sale.

Separate the possessions into three groups: items of real monetary value, items of sentimental value that beneficiaries want, and junk that no one wants.

The first group takes some effort. If there’s furniture with real value, ask whether any beneficiaries want it. If no one does, hire an estate sale company, sell it, and deposit the proceeds in the trust account. Take pictures and document everything. The estate sale company should give you an itemized list of what sold and for how much. If a beneficiary wants something with real value — gold jewelry, a Rolex — get it appraised, tell the beneficiary they can have it, but their share of the estate will be reduced by that value, and get them to sign something to that effect.

The second group is usually the most contentious: family photos, keepsakes, jewelry, etc. A few methods that may work:

• Round-robin selection. Each beneficiary takes turns picking one item, in an order set by lottery or birth order, until everything in this category is claimed. It feels fair because everyone watches the process happen.
• Written preference lists, collected before anyone sees anyone else’s list. Where there’s no overlap, distribution is automatic. Where there is, that’s what round-robin or a coin flip is for.
• Duplicate what you can. Photos can be scanned and printed for everyone. Not everything is zero-sum.
• Put a floor under sentimental items that also happen to be valuable. If two people want the same ring and it’s worth $8,000, appraise it and treat it like the Rolex above — whoever takes it has their share reduced accordingly, in writing.

None of these methods is legally required unless the trust specifies one. What matters is that you pick a method, apply it consistently to everyone, and document that you did.

The third group is the easiest. Get rid of it. Call a junk removal company, have them take it away.

When It Won’t Resolve on Its Own

Most disputes end once you apply one of the methods above and hold the line. But if a beneficiary genuinely won’t let go — not because the process was unfair, but because they’ve decided to make a project of it — you’re not stuck negotiating forever.

As trustee, you can file a petition for instructions with the probate court, asking a judge to approve a specific plan for dividing the property. Once the court signs off, the objection has nowhere left to go — it’s a court order. This is a more drastic step, but it is an option. The trust will have to pay the attorney fees and court costs, and delay the process, but sometimes the trustee needs a judge to step in.

What If a Beneficiary Hires an Attorney?

That happens sometimes. When it does, two things follow. First, they pay the attorney out of their own pocket — it costs them money to keep playing. Second, if you’ve hired an attorney to help with the administration, it usually makes things easier: your attorney and their attorney speak the same language and know the same rules. I actually welcome a difficult beneficiary hiring counsel. Chances are it won’t be an aggressive personal injury attorney chasing a cut of — well, the wind chimes. It’ll more likely be a reasonable estate planning attorney who talks some sense into their client.

Your Endgame as Trustee

Your job as trustee is not to fix embedded family dysfunction through the trust administration. It would be great if you could, but you can’t. I tell clients that a living trust can avoid probate and make for an efficient distribution of the estate, but it can’t fix broken relationships. Same with a trust administration. Your job is to get to the finish line — follow the trust’s terms with your attorney’s guidance and get the assets distributed. Along the way, you may have to referee and make peace, but you have to keep things moving.

If two beneficiaries can’t let go of Mom’s wind chimes, give the wind chimes to someone else. You have the authority. If there’s a standoff over the dining room table and chairs, send it to the estate sale company. Make clear to beneficiaries that personal property allocation isn’t the venue for settling old family scores. This isn’t Frank Costanza’s airing of grievances at Festivus.

Since low-value sentimental items cause the most friction, use your authority as trustee to make the final call when nothing else works. No one can complain that your decision cost them money. It’s the wind chimes, not the Rolex.

We Can Help

If you are stepping into the successor trustee role, you don’t have to go it alone. In fact, unless you will be administering a very small trust estate, you will need help, and we are here to help — whether you are in the Sacramento area or anywhere in California.

Contact us to schedule an initial call with one of our attorneys.