The purpose of a comprehensive estate plan is to decide how to handle your assets during your lifetime and then how to distribute them when you die.
Most people readily understand how important it is to make sure that real estate (e.g., the family home) gets properly distributed. So, making arrangements for proper distribution of real estate after one’s death is common. But we sometimes forget that the classification of personal property —whether as tangible or intangible —matters in estate planning.
Well, because the distinction (whether an item is considered tangible property or intangible property) can often raise issues during probate regarding who should get what, affecting how valuable assets are distributed to one’s heirs.
Knowing the difference between tangible and intangible property in order to properly plan for distribution of your assets after your death is an essential aspect of estate planning.
So, let’s look at the differences to get a clearer understanding of why it matters in estate planning.
Distribution of Property after Death
When you create a Last Will and Testament (“Will”) with an estate planning attorney, one of the things you will do is decide how you want your property distributed.
Property that is not real property, is generally classified for purposes of estate administration as either tangible or intangible property.
Whether an item is classified as “tangible” or “intangible”, “personal property” or simply “property,” can affect its distribution during administration of your estate.
As a result, it is important to understand the differences so that you can make sure that your estate plan is set up to distribute your assets the way you want them to be distributed.
What is Tangible Property?
While the Florida Probate Code does not have a technical definition of “tangible” property, as you might imagine, “tangible” property generally refers to property that you can touch. This covers a broad range of objects of course. Some examples of tangible property are:
- Recreational Vehicles
Yes, you read that right. Legally, pets are considered to be “property.”
To meet the legal definition, “tangible” property must not only be tangible, of course, but also weighed and “physically relocated.”
Keeping up with the law’s definitions of tangible and intangible personal property is key in estate planning and probate administration. For example, Florida recently passed a law stating that precious metals, in any tangible form that are kept for their historical or artistic value or uses other than as legal tender, are considered to be “tangible personal property.”
What is Intangible Property?
Intangible property is property that does not have a physical existence or that may not be felt, weighed or relocated or (for other reasons) is not considered to be tangible property. For the most part, “intangible” property refers to property rights rather than to physical items.
Intangible property also covers a wide range of property. Some examples of intangible property include:
- Intellectual Property
- Your brand
And much, much more.
Estate Distribution and Tangible or Intangible Personal Property
But simply understanding the difference between tangible and intangible property doesn’t tell the entire probate distribution story.
Why does this matter?
Because in many cases, generic references to property in a Last Will and Testament —such as, “I leave all my personal property to my cousin, Bob” —can lead to confusion or family feuds over who gets what. And family disputes often embroil the estate in messy and expensive litigation. Plus, very often the wrong person ends up with the property.
To avoid this, Florida uses a separate memorandum that allows a testator to create a list of certain personal property (not all personal property can be devised this way) along with his/her instructions on who should get what. The list must follow the law’s requirements concerning proper form, and it must be specific.
It isn’t a cure-all, and not all property can be directed in this way (intangible property cannot be included in this list), but Florida’s separate writing statute goes a long way towards preventing distribution problems when it comes to tangible personal property.
Don’t let the differences between tangible and intangible property confuse you. Consult an experienced estate planning attorney.
Estate Planning attorney Samantha J. Fitzgerald
Estate planning is more than just property division. It provides protection for your loved ones and peace of mind for you. At the Law Offices of Samantha J. Fitzgerald, we work hard to ensure that your wishes will be followed, and your loved ones taken care of when you are gone. When you work with the estate planning attorneys at the Law Offices of Samantha J. Fitzgerald, you get more than just an estate plan: you get peace of mind. Connect with us on Facebook or Instagram or email us at: [email protected] today.