It’s December, and many of us are thinking about giving gifts. I have started asking my children what they want as gifts for Christmas presents, and they are thinking about it. Even harder than that, I am trying to figure out what to ask for as a Christmas present for myself. I tend to purchase what I need or want as the need comes up, so when it comes to Christmas gifts, I am also at a loss. I could write out a list and send it to my wife and children as suggestions, but that seems kind of silly, and a little bit too much like work. I tend to make lists of tasks I need to accomplish, but only for myself. I don’t want to make a list for my paralegal, as she has her own way of getting things done, and I don’t need to send her a memo on how to do her job that she already knows how to do. As a solo estate planning attorney, I don’t send a lot of memos to the other people in my firm. I do email my paralegal, but I don’t send many memos…I think I have reached a grand total of zero memos for this year, so why am I talking about memos?
Because a memo (short for memorandum) can be an important part of an estate plan!
A separate tangible personal property memorandum is a memo that can be used as a separate place to give specific gifts to specific people. Using a memo properly provides much flexibility in your estate plan, and can help you keep your estate plan up to date with less effort than changing the full estate planning document. Using a memo is not the only way to give specific gifts, but a memo is useful to many people and in many situations provides a way to do what you want for specific property without extra effort.
What is a Separate Memorandum?
When you set up a will or a trust for your estate plan, you can build in a reference to a separate memorandum that allows for specific gifts of tangible personal property to specific people. This separate memorandum is not really all that exciting in what it looks like – it ends up being a separate piece of paper that has lines on the paper. You can hand write in a specific item, along with who should receive the specific item. You sign and date the separate memorandum, and those gifts are now given the same force and effect as if you had written the specific gifts into the will itself.
What Type of Gifts Can You Make in a Separate Memorandum?
A separate tangible personal property memorandum cannot give away all types of property. As the name suggests, a tangible personal property memorandum only gives away tangible personal property – things you can touch, or hold, or move around. Gifts of real estate, or gifts of money from a bank account, or investment account, are not something you can give away in a tangible personal property memorandum. Gifts of that type of property need to be put directly into your will or trust. Those types of property are generally more likely to be higher in value, or more important to your beneficiaries, so the law wants them to be treated more formally. A separate tangible personal property memorandum is definitely more flexible, but it doesn’t work for every type of property.
When clients ask me how much detail they need to put into a will or trust, I will tell them they can be as specific, or as general as they would like. If they want to be more specific in what they want to give to specific people, then I suggest a tangible personal property memorandum.
One nice feature of a tangible personal property memorandum is that the memorandum does not need to be completed before a will, or trust, is signed. Instead, the separate memo can be fillet out at any time before, or after a will, or trust is signed. That way, you don’t need to come up with a list of every possible gift to give to your estate planning attorney before a will or trust can be completed. You should write specific gifts before you die, or become mentally incompetent, but you have more time to get the separate list of gifts completed than trying to get it done before your will or trust can be signed.
Can Gifts in a Separate Memorandum be Changed?
If you use a separate memorandum to give specific gifts, making changes is simple. When you write a gift into a separate memorandum, you can change your mind and change the memorandum at any time. You can simply cross off a gift, and give it to someone else, or you can destroy the separate memorandum and write a new one. You can do this without needing to make sure a separate memorandum meets all of the technical requirements to change a will.
As described above, you can make changes on your own. The ease of changing a specific gift can create some problems, as someone who is not you could change a specific gift, but if they do so, they are committing fraud. Fraud would need be proven, and most people don’t go to that place, so in most cases the flexibility of using a separate memorandum overcomes the potential problems, so using a separate tangible personal property memorandum often works well.
How Do You Change a Gift not Listed in a Separate Memorandum?
If you need to change a provision of a will, then the proper legal way to do so is by using a will codicil, which is the somewhat formal and fancy legal name for a will amendment. A will codicil should be signed, witnessed, and notarized according to the same rules to make a will valid. Most people don’t keep up on the current rules related to will codicils or changing a will, so they end up going back to an attorney to make changes to a will. If you have specific gifts written into a will, then you will need to change those specific gifts by will codicil. Will Codicils are effective to change a will, but if a separate memorandum works for a specific gift, then using the separate memorandum may be easier for you.
Similarly, if you want to change a specific gift in a trust, you need to create a trust amendment. Most trust amendments change only a specific part of a trust, but sometimes a trust amendment will change the entire trust. While a trust amendment is easy enough to create, the trust amendment needs to meet the legal and technical requirements for a trust amendment, so most people seek the help of an attorney to create a trust amendment. A trust can reference a separate memorandum, so you can use a separate memorandum, as works for you.
Using a Memorandum is Only Part of An Estate Plan
When you set up your estate plan, a separate memorandum is a document referenced by your will or your trust. The estate plan itself references the existence of the separate tangible personal property memorandum, which is how a separate memorandum can have legal force to dictate how a specific gift, or specific asset will be distributed. The separate memorandum may be an important part of your estate plan, but only if setup and referenced properly in the main documents of your estate plan – the will or the trust. A separate tangible personal property memorandum alone is not enough.
Your Estate Plan May Use a Separate Memorandum, if it is Right for You
When you are ready to set up your estate plan, you will want to consider what you want to do with your assets. If you want something specific given to someone, then using a separate memo may be appropriate. Just like you need to be specific about what Christmas gift you want, you need to be specific in what you give away. If you are less concerned about specific gifts, and just want to give away general categories of assets, or everything to someone or a group, then you may not need a separate memo for specific gifts. You can discuss whether a separate memo is a tool to help you in your estate plan with your estate planning attorney. You can make an appointment with an estate planning attorney by going here.