In estate planning, we ask the question of who will inherit one’s property.
What is property?
In common usage, people sometimes think it just means real estate.
Under the law, though, there are three categories of property. Most people have two types and some have all three.
Real property is land and buildings. Anyone who owns a house or a condo owns real property. (A mobile home is not real property because one does not own the land the vehicle sits on.)
Personal property is divided into two categories. Intangible personal property is cash and its equivalents: mutual funds, stocks, insurance policies, savings and checking accounts, even the wad of bills you may have stuffed in your sock drawer.
Tangible personal property is a large category of what people own. It’s anything you can touch. It’s the baseball card collection, jewelry, furniture, housewares, clothes, automobiles, coin and stamp collections.
When I do an estate plan for a client, I ask for a list of all the client’s real property and intangible personal property. I want to know what needs to go into a trust and what can safely remain outside of a trust. I don’t ask for lists of tangible personal property.
One’s estate plan, whether it is a will-based plan or a trust-based plan, will generally dispose of one’s real property and intangible personal property, i.e. real estate and money in its various forms.
My Will says that attached to the Will document may be a list of tangible personal property and who gets various items. For trust-based plans, I provide an ancillary document called a Personal Property Memorandum. If you want to list who gets the knick knacks, books, garden tools and the like, there’s a place to write all that down without it taking up volumes in the Will, and allowing you to revise the list to your heart’s content without having to keep visiting a lawyer to revise the formal will document.
Next time you think you don’t “own” anything, think about the three types of property under the law and remember that just about everyone owns some form of property.