Sweating The Small Stuff
After a loved one dies, family feuds are more likely to erupt over treasured personal possessions than over money. Here's how to keep the peace
By Josh Lerman

(MONEY Magazine) – So you finally buckled down, did the responsible thing and drew up an estate plan for your family. You wrote the will, spelling out who gets the house, the bank accounts and the investments; maybe you even set up a trust for your children or grandkids. But did you stipulate who inherits the pocket watch that your grandfather gave to you years ago? Or your mother's wedding dress? Did you make provisions for your collection of old coins, the family photo albums and the dog-eared copy of Goodnight Moon that you read to each of your kids at bedtime when they were small?

If you're like most people, the answer is probably no. You focused responsibly on the big stuff—the financial assets and other valuables—and didn't give much thought to the small stuff, which often causes the most contention when a loved one dies. "The fundamental problem is that personal possessions often can't be distributed equally to more than one heir," explains Marlene Stum, an associate professor at the University of Minnesota who is an expert in the field of families and inheritance. Money can be split in thirds, but a painting, for example, cannot. Then too, Stum notes, "People have far more emotional attachment to personal items than to money, which makes the division process potentially traumatic."

The result: Siblings and other relatives may squabble over who gets what, sparking tension or reigniting long-simmering rivalries. Hurt feelings ensue, complicating the grieving process. At worst, those feelings can grow into family feuds that end with relatives not speaking to one another for years.

How can you avoid having your estate become a 21st-century Bleak House? Start with these concrete steps.

DECIDE WHAT'S IMPORTANT. Virtually any piece of nontitled property—that is, a personal possession with no title, deed or other document to indicate who legally owns it—can become a bone of contention if the item has sentimental or monetary value. While you can't make provisions for every piece of furniture and jewelry, and all books, toys and sundry other items you own, you should try to identify the possessions that mean the most to you and make plans for who among those you love gets those belongings.

Start by taking a mental inventory of your most cherished belongings. Then think through what you hope to accomplish with bequests of those items. Do you want to make sure your DVD collection goes to someone who shares your love of movies? Do you want to give an adult child who's struggling financially a few pieces of jewelry that she might be able to sell if she needs the money? If you're in a second marriage, do you want to ensure that your children inherit certain items that have been in your family for generations? "With stepfamilies becoming more common, the opportunity for nasty disputes that split families apart has grown enormously," warns estate attorney Colleen Barney, co-author of Best Intentions: Ensuring Your Estate Plan Delivers Both Wealth and Wisdom.

Of course, what you think will be meaningful to family members and friends and what they consider meaningful may be very different. So Stum suggests you also ask potential heirs which items they'd like. Stum recalls a man who was disappointed to learn that none of his children or grandchildren wanted his stamp collection, amassed over 50 or so years and worth more than $10,000. A woman was surprised to learn that three of her seven adult children coveted a carousel-shaped Christmas ornament with a red metal fan inside that spun when placed near the heat of a tree bulb. Estimated value: 25¢. The mom still has not decided who will get the trinket, but without asking, she'd never have known it was special to any of her offspring.

DEVISE A FAIR SYSTEM. Then comes the hard part: actually deciding who gets what. The key is to connect the goals you have for your bequests with what's fair in the context of your family. Should your oldest child get first dibs? Does division by gender make sense? (See "Four Mistakes to Avoid" for why this may not be the best approach.) Or, as Stum recommends, should each item go to the person you think will treasure it most? "In making bequests, it's important to realize you can be fair without being equal," says Stum, who offers tips about passing along personal effects on the website called Who Gets Grandma's Yellow Pie Plate? (yellowpieplate.umn.edu). "You don't have to split everything evenly by dollar value, as long as the process you use is thoughtful."

Invite input from family members and friends, asking not just what they want, but what they think others should get as well. Recognize that these conversations can be difficult—you are, after all, raising the specter of your own death, even if indirectly, with people who love you—and look for natural opportunities to talk. For example, when a friend is dealing with transferring personal property after a death in the family, you might ask, "What would you do in the same situation?"

LET YOUR WISHES BE KNOWN. Once you've come up with a plan, relay the decision to your loved ones—not just what you're leaving to whom, but why. "The more you can communicate in advance, the better," says Stum.

"Your heirs may not like your decisions, but at least they'll know they are your wishes and will understand your motives."

Don't rely on verbal promises, which are not legally binding and can be easily misunderstood. Instead, put your wishes in writing, sign and date the list, and attach a copy to your will. In most states, you can revise such a document when circumstances warrant, without going to the expense or effort of updating the will itself. Also be sure your will explicitly mentions the existence of the list. Says Barney: "A simple sentence like 'I leave all my possessions to my children with the exception of the items on such and such a list' is all you need."

Be specific in describing the possessions you're talking about so there's no confusion over, say, which painting or pieces of silver you're referring to. One couple Barney worked with put together a photo album of items they were leaving to their children, with an explanation of why each one was important. This ruled out confusion and also endowed each object with a halo of emotion that increased its value.

Understand, though, that no matter how carefully you plan, there will be some belongings you haven't accounted for that more than one heir will later covet. So consider including a system for resolving such disputes in your will. You might stipulate something as simple as having the parties involved draw straws or flip a coin, Barney says. Or, Stum suggests, you could leave your heirs equal quantities of Monopoly money or marbles, and have them bid on the personal items they want.

In the end, however, the particular system you devise may be less important than demonstrating the care you've put into the bequest process. "The legal technicalities are the easy part," says Stum. "Sorting through the family dynamics is the real challenge."