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The Importance of a Letter of Instruction to the Trustee Tuesday, September 19, 2017

Your (Testamentary) Word is As Good As the Paper It’s Written On

A great rule of thumb in estate planning is to document your wishes, so they actually occur when you are gone. While the law definitely does not support “oral promises” when it comes to real estate, the same could be valid for tangible personal property such as art, collectibles, antiques, jewelry, etc.

It is often the case that Trust Administrations or Probates cannot conclude on account of the little things. After the real property and financial assets are split up, there remains the furniture, personal effects, memorabilia, and the “tchotchkes” that hold dear sentimental value, which are usually locked up in a storage unit. These items remain the subject of power struggle and deep conflicts between the beneficiaries. Needless to say, this ties up the administration and multiplies its cost.

It is therefore of great service to the Successor Trustee when the trust creator goes a step further, and prepares a Letter of Instruction to the Trustee itemizing specific objects with the instruction that they go to certain individuals. This allows for an orderly and civil division of one’s Stuff, which is often an overlooked point in estate planning, but which is always a main point of contention during the post-death administration process.

It is noteworthy, however, that the California Probate Code limits the cumulative value of such items of Personal Property itemized on a Letter of Instruction to $25,000, and the value of any one single item – to $5,000 (Prob. Code, § 6132). In the event these amounts are exceeded, the beneficiaries of the Trust have the ability to “defeat” a distribution per such “Letter of Instruction,” and instead include such items under the main distributive provisions of the trust.

This is where the importance of consulting with a trust attorney is so significant – larger, more valuable items (such as jewelry, art, collectibles, precious metals, wine collections, etc.) should be included with the main distributive provisions of the Trust. Less valuable items, such as china, crystal, furniture, etc., that do not exceed the statutory amounts noted above, can be listed on the Letter of Instruction to facilitate the Trustee with their quick distribution, and avoid storage costs and delays.

If you haven’t already done so, look around your home, and ask yourself – have I considered the “tchotchkes”? Perhaps it’s time to do so, before this becomes the deal breaker for your Trustee and your trust beneficiaries.

Contact The Law Offices of Maria N. Jonsson, Trusts & Estates in Marina del Rey, on 475 Washington Boulevard. Call (310) 439-3718, or e-mail Maria@TrustAttorneyMDR.com. Visit www.TrustAttorneyMDR.com to learn more.

 

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