My clients have a wide range of concerns about their estates but one of the most common is what will happen to family heirlooms (or any items of sentimental value).  They want to pass those precious items down to future generations and they don't want their heirs to fight over them.  

Fairly dividing items of high emotional value is tricky.  It is made even more complex by family dynamics and shifting memories ("Mom said I could have it because I reminded her of Aunt Mary!").  There are a few tricks to getting through the process as painlessly and fairly as possible, as long as everyone agrees to certain ground rules.  

Decide Who Gets What, Then Write it Down

The cleanest approach is to make these decisions with a clear head long before any crisis.  Inventory the most important items, list them and clearly note who is to get what.  You don't need to justify or explain your decisions - that can lead to unintended hurt.  Once you have gone through that process, share the list with your heirs.  Your decisions may cause some awkward conversations but far better to do it when everyone is in a stable place than surprising somebody after your death, when they will be emotionally fragile.

Appoint an Independent Trustee

Even with your best intentions, there will likely be some items that are not listed (perhaps you didn't realize the attachment your heirs have to an item or you simply left it off the list).  In that case, it's best to have somebody as objective as possible to adjudicate the distribution of items.  If you have a professional trustee, it is typically that person.  Or it can be a family member or friend who is not part of the group receiving the heirlooms.

Put a Process in Place (and Stick to It)

There are a couple of classic processes that professional fiduciaries use to fairly divide items that have not been specifically designated by their clients for one of their heirs.  They aren't fancy by design and sometimes look like playground techniques for choosing teams, but they tend to work better than more complex schemes.

Pick Out of Hat

Simply inventory all the items and write them down on slips of paper.  You can put them all in the hat at the same time, or roughly categorize them into groups of equal value and have several drawings.  Each heir pulls from the hat and the trustee keeps track of who drew what in a master list.  In some versions, heirs can "trade" heirlooms to accommodate the different values that they may place on the items.

Round Robin (or Draft)

In this version, heirs draw numbers from a hat to determine their picking order.  Then each heir, choosing in order, selects the heirloom of their choice until all of the items are chosen.  A slight variation is for the draft order to "snake."  That is, the last picker gets to choose twice, then it goes to next-to-last and then backwards through the list.  For example, the first three rounds for a group of four heirs would look like this:

First >> Second >> Third >> Fourth

Fourth >> Third >> Second >> First

First >> Second >> Third >> Fourth

Auction

Assign each heir a set number of points (for example, 1,000 pts).  Then present each item and have each heir provide a sealed bid (that is, not public) for that item.  This is somewhat more complex and prone to problems, but has the advantage of allowing each heir to independently value each item.  For example, perhaps Mom's pearl necklace is worth lot to one daughter, while the other daughter places more value on Mom's handwritten recipe book.  This method removes some of the luck element of the other methods and allows each daughter to bid what each item is worth to her.

No matter which method you choose, the most important thing is to be transparent and clear.  Nobody should feel like they have been left out or didn't know what was going on.  Overcommunication and inclusivity are your friends in this process.

Those of us who help older clients (or who simply have older relatives for whom we care) know that the amount of work and the number of skills needed to do it well can be overwhelming.  No one person, no matter how brilliant or well-intentioned, can do it alone.  It requires a team of specialists and family members, all working together to make sure that the client has the highest possible quality of life and, after death, that their beneficiaries receive all to which they are entitled.

I recently had a conversation with a very experienced fiduciary and she told me that much of her value is her extensive network of other professionals, all of whom she has validated over the years.  Her database of contacts allows her to quickly solve problems with trusted providers.  Most family members, if asked to manage care or the estate at short notice, would waste a tremendous amount of time simply sourcing these services (and relying on Yelp, Google, Nextdoor or word of mouth for a quality assessment).  Think about it - do you know a quality person for each of the roles below?

The list below doesn't cover every possible role - just those that come up the most frequently.  You can easily imagine situations that would require even more narrow specializations.  A good fiduciary can help you navigate this difficult transition with a minimum amount of work, stress and expense, while providing confidence that tasks are being handled professionally and ethically.  

Medical and Personal Care

Family members

Care manager

Homecare provider

Housekeeper

Assisted Living Facility staff

Medical team (including doctors, dentist, ophthalmologist, therapists, audiologist, etc.)

Finance and Legal

Estate attorney

Licensed professional fiduciary (to build and coordinate with all the rest of the team)

Other attorneys (litigation, small business, family law)

Daily Money Manager (to pay bills, move money, etc.)

Tax advisor

Bank

Investment advisor

Court employees

Real Estate

Real Estate Agent

    Title Company

    Staging company

Contractor

Tradespeople (plumber, electrician, etc.)

Moving company

Junk removal

Housecleaner

Landscaper

Estate seller (furniture, art, collectables, etc.)

Property Manager (for rental property)

Other

Auto mechanic

Family mediator or arbiter (to resolve any disputes if the team above cannot)

Special Needs Trusts (SNTs) are more or less what they sound like.  They are trusts designed for individuals who are unable to be gainfully employed in a full-time capacity (see definition below) and who don't want to forego the government aid to which they are legally entitled.  Pretty straightforward.  But just about every government agency with an acronym has jumped into the fray with their own set of rules and regulations: the Social Security Administration, the IRS, MediCal, MediCaid, the California Probate Code, SSI, Congress, etc.  Because of the resulting thicket of regulations, rules and exceptions, setting up and administering an SNT is a task best left to the professionals.  

First, some definitions:

• “Disability” is the inability to engage in any “substantial gainful activity” (SGA) due to any medically determinable physical or mental impairment, or combination of impairments, that has lasted or can be expected to last for a continuous period of at least 12 months or result in death. 20 CFR §416.905
  
• There are income and resource limits for qualifying for public benefits and they can be fairly complex and restrictive.  In 2021, the SGA income limit is $1,310 per month, i.e., income below $1,310 is not considered SGA for purposes of determining whether an individual is disabled.  For Supplemental Security Income (SSI), the resource limits (money in the bank, other non-house assets) are $2,000/person or $3,000/couple.  For California, the structure below is a very simplified overview.  
• Funds disbursed from a Special Needs Trust cannot be spent in certain categories (food, cash, housing, etc.) without a resulting reduction in public benefits.  That reduction in public benefits can be substantial and can wipe out the benefit of an SNT without careful oversight.

"Well, this is going to be awkward."

That's more or less how most people think about any discussion that involves money, death, illness or loss of control.  Nobody relishes the idea of acknowledging the inevitability of getting older.  But clarity, kindness and transparency can help avoid problems down the road.  

How are these conversations best approached?  Family dynamics differ, but a few guidelines might be helpful:

Don't Put it Off

Why wait until a crisis unfolds?  Decisions about who has medical and financial responsibility should be made with a clear head, not in the heat of the moment.  Although this is nobody's idea of a fun conversation, it should be held before any action is needed.  And since none of us knows when a crisis will emerge, there's no sense in waiting.

Set Aside a Time to Discuss 

Don't spring it on your parents or siblings.  Set up a time to discuss things, either by phone or in person.  This will give everyone time to think about what they want and to anticipate any pitfalls.  Nobody likes to be surprised or to feel like they have been tricked into a delicate conversation before they are ready.

Ask if Your Parents are Already Working with an Estate Planner

Existing documents should be available in case there are questions that come up during the discussion.  If appropriate, you might include the estate planner or attorney in the discussion as an objective third party.  An experienced estate planner can guide the process and make sure that all aspects of the plan are considered and communicated clearly.

Involve Everybody Up Front

Secrecy (or the appearance of secrecy) is a real problem during estate planning and execution.  Secrecy erodes trust and breeds suspicion.  If there are potential issues with the estate plan, it's best to address them early in the process, not during the trust distribution or execution of the will.  It is in everyone's best interest to set expectations and responsibilities appropriately and clearly.  All involved parties should know the plan, understand their role and what to expect from the estate.  If you surprise a family member during a crisis with the fact that they do not have authority over financial or medical decisions or that they are not going to receive what they expected from the estate, you are just asking for trouble.  

Document Everything Clearly and Completely

A document-based approach, with checklists and a Q&A approach can take some of the emotion out of these discussions.  "We just have to work our way through this set of questions" is a simple way to get everyone involved in completing the task, rather than meandering through a formless discussion (which can often go sideways).

Estate planning and the delegation of responsibilities within a family are tricky in many cases.  No amount of pre-planning or strategy can solve all family dynamics.  But the simple steps above can help avoid some of the most common pitfalls.