Personal property is legally defined as “anything other than land that may be subject to ownership.” Under this definition, the defining characteristic of personal property is that it is movable. This is the main difference between real property and personal property. Property that is attached or fixed to real estate is known as real property or realty. In comparison, fixtures that can be removed without damaging the building are generally included under the definition of personal property.
The two basic types of personal property are tangible and intangible. Tangible property is personal property that can be physically handled, including but not limited to:
- Furniture; and
Intangible personal property is property that cannot be physically handled, including but not limited to:
- Trust fund accounts;
- Deeds of title; and
- Ownership rights.
It is important to note that property laws may differ based on whether the item is classified as realty or personality. Additionally, property laws can vary based on the jurisdiction in which the property is located.
These differences in definitions can be seen in many areas of law. An example of this would be how in contract law, sales of real property must always be in writing. However, not all personal property sales contracts must be in writing. Some examples of other legal implications of real and personal property may involve:
- Personal property tax consequences;
- Divisions of property in a divorce or separation circumstance;
- Property distributions in an estate planning context;
- Descriptions of property contained within a title deed;
- Personal property contracts; and
- Distributions of property when a business is sold.
Clearly, it is essential to be aware of whether property is classified as real or personal. Some property items that are classified as “personal” may become real property if an item is attached to a building, or if materials are made into a gate or fence which is attached to the land.
For the purposes of estate planning, all of a person’s property can be divided into real property and personal property. To reiterate, real property includes any fixed area of land and anything attached to it that is immovable. This would include buildings, ponds, and roads. Personal property is everything else, as it is an umbrella term covering items that do not carry the rights and restrictions that come with real property.
What Is Personal Property in a Will?
As previously discussed, the legal term “personal property” should be considered a catch-all phrase for anything that is not considered real estate, or related to land usage. Some of the most common examples of personal property items are ones that the testator used in their everyday life. Again, this would include items such as clothing, jewelry, and other household items. These items may not be worth much in monetary value, but generally hold nostalgic meaning for the testator’s family members.
Personal property can also include bigger, more expensive items. This would generally include items such as cars, trucks, tractors, and other machinery. Financial assets such as bank accounts, stocks, bonds are also classified as personal property.
To reiterate, tangible personal property in a will is any item intended for household or personal use, or for decoration. The above mentioned examples of jewelry and clothing would generally be considered tangible personal property. However, in terms of writing a will, tangible property does not include mobile homes.
Intangible personal property in a will would be anything similar to bank accounts and securities. It is important to again note that these definitions are provided by state statute; as such, they can vary by state. You should consult with a local attorney if you have any questions regarding how your own state defines personal property, as well as tangible and intangible personal property.
How Can I Resolve Conflicts and Language Issues?
Some wills explicitly define what is to be considered personal property, and what is to be considered real property. However, the broad meaning of the term “personal property” can sometimes create contests between family members.
Conflicts over what a will says are referred to as “will contests.” Contests generally involve the recipients, or beneficiaries, disputing over various terms of the will. To contest a will means to challenge the authority or validity of the will, as well as its provisions.
Some of the most common examples of will contests include:
- Disputes concerning which family member is entitled to what specific property;
- Disputes regarding the amount of money to be distributed to a specific beneficiary;
- Conflicts over specific property, such as heirloom items;
- Conflicts as to whether a person is actually entitled to receive an inheritance as a beneficiary; and
- Various other disputes, often regarding the testator’s intentions.
Generally speaking, a person will contest a will when they feel they are being cheated out of what the testator intended for them to receive. An example of this would be what they believe to be their rightful inheritance. As such, that person will believe that the distribution is unfair or otherwise not in accordance with the decedent’s actual wishes and intentions. In these cases, the court will consider the accompanying language in order to help determine the testator’s intent, to make the best guess at meaning.
An example of this would be if a person leaves all of their “personal property” to a child, but then says they want to give their 1967 GT Shelby Ford Mustang to a sibling of theirs. The court will be more likely to award the car to the latter. The specificity of the gift clearly demonstrates the testator’s intent for their sibling to receive the car, even though the car would fall into the category of “all personal property.”
Courts will also consider any qualifying terms in order to help determine the testator’s intent. “Personal property in my home” is an example of an easy way to determine intent. Language that limits the location, type, or specificity of property are the most common ways that a judge will divide up the testator’s assets, should any conflicts arise.
How Can I Avoid Misunderstandings Through Estate Planning? Are There Any Alternative Distribution Methods?
One of the best ways to avoid misunderstandings through estate planning is to be as specific and detailed as possible. Avoid vague or open-ended language. When drafting their will, many people include lists of personal property and items within the will itself. This list is intended to specify which items go to which beneficiary.
While this is advised, it is not always the most reasonable option due to the fact that personal property changes vastly throughout the course of the testator’s life. Additionally, it can be difficult to predict which exact items will be in a person’s estate at the time of their death.
A better option could be to attach a separate document to the will, commonly known as a “personal property memorandum.” Essentially, this document is a letter to the estate’s executor which details where specific items will go once the will is executed. A personal property memorandum can be rewritten as many times as needed.
It is important to note that this can only be done with tangible personal property. Specific gifts of money must be put into the will document itself, and real estate must be transferred either through the will or another document. Examples of other documents could include a Lady Bird Deed, or a Transfer on Death Deed.
Although a will does not always need to be witnessed and notarized, it is prudent to do so if any disputes are expected. Doing so proves that the will is in accordance with the wishes of the testator, and that the will is legally valid.
In terms of alternative distribution methods, living trusts are becoming a popular alternative to the traditional will. Once the trust has been established, the testator would then execute a bill of sale, which can be for a nominal amount. This states that all personal property is owned by the testator during their lifetime as a trustee. After they die, everything then transfers automatically to the beneficiaries named in the trust with no need for probate.
Do I Need an Attorney to Help Me Write a Will?
You should consider consulting with an area will lawyer when you are ready to write your will. An experienced and local estate attorney will be best suited to understanding your state’s specific laws regarding the matter, such as how your specific state designates personal property vs. real property. An experienced attorney can help you draft a legally valid and enforceable will, and include any provisions you think will reduce the probability of disputes once you have died.