Avoiding Problems With Personal Chattels

In her latest blog Head of Wills & Probate, Jo Robinson, discusses what personal chattels are, how to sell them and what you can do to avoid any problems that may occur…

What Are Personal Chattels?

Personal chattels are your personal possessions. You may think of them as the contents of your house but the The Inheritance and Trustees’ Powers Act 2014 (which amended s46(1)(i) of the Administration of Estates Act 1925) defines personal chattels as “tangible movable property” with three defined exceptions:

Money and securities for money
Property used solely or mainly for business purposes
Property held solely as an investment (property which had no personal use)

When a loved one dies, their homes are often filled with items they have accumulated over many years. Historically, family heirlooms and furniture were often passed down through the generations.

Unfortunately though this no longer seems to be the case. Clutter is out and minimalism is in. In addition, millennials are more inclined to want new items rather than their parents’ household goods and generally houses are smaller so people just don’t have the room to store things that they don’t really want or need.

What Happens To Personal Chattels On Death?

This all depends on what the Will says. If personal belongings are gifted in a Will then the gift will usually take effect. If there is no specific gift of the personal chattels then they will simply fall into and form part of the estate.

If there is no Will then the personal chattels will pass under the laws of intestacy – to the spouse if there is one and, if not, then to the children (further provisions are not considered here).

Can The ‘Personal Representatives’ Sell The Chattels?

Yes – if the personal chattels are not specifically designated to someone in the Will, the executor or administrator should sell the personal chattels for their fair market value. It is important to remember that the personal representative is under a duty to obtain as much as possible for the estate assets so as to protect the creditors and beneficiaries of the estate. The sale proceeds must first be used to pay priority claims such as funeral expenses, tax, outstanding bills and other administrative expenses.

How Do I Sell The Personal Chattels?

How you sell the personal chattels depends on the amount of time and effort you can commit to managing the sale. Fortunately, there are several options when it comes to selling the assets, including: auction, private sale, internet auction or traditional advertising methods, such as newspapers, bulletin boards or word of mouth.

Another way to dispose of these items is work with an auction house/house clearance company who can do everything from managing the details of the initial evaluation of your items to writing you a cheque when the sale has been completed. It is important for the personal representative to keep accurate records of the sales and donations, as they may have to report to the court if challenged about how they have handled the assets.

Should I Donate, Give Away Or Throw Out The Rest?

Any personal chattels that do not have a value can be disposed of. The best-case scenario is to find a good home for them rather than just throwing them away. Again, this may take additional time and effort, but at least they won’t end up needlessly in landfill. Alternatively, find a local charity, or non-profit organisation that takes used items such as clothing, furniture and toys. Keep in mind that items that do not meet current safety standards may not be accepted. If you have items with historic or cultural significance, consider donating them to a local or larger historical society or museum. Also note that if you donate items to a registered charity this may provide some tax deductions.

Recycling electronic items such as appliances, computers and TVs can help to reduce waste. Check with your local authority for their guidelines on recycling.

What Can Go Wrong When Dealing With Personal Chattels?

Because people might not realise that the personal chattels need to be included and distributed as part of the estate, well-meaning family members or personal representatives might clear a property too quickly, getting rid of items that are meant to pass to certain beneficiaries or that should be valued to ensure the correct inheritance tax is paid.

Even if the personal representatives clear the person’s home carefully, it may be that certain gifts made in the Will cannot be found or have been lost or given away during the deceased’s lifetime.

It is quite common for family members to disagree about who gets what and, if the Will does not specify gifts, it can result in protracted and costly disagreements.

How Can You Avoid These Headaches?

Firstly, it’s a good idea to start the discussion about your loved ones’ wishes while they are still fit and well.

Second, having an up-to-date Will in place is essential. Gifts of personal chattels in Wills are commonplace and there are different ways to incorporate the gift – for example they could be left directly to beneficiaries, or they could be left to the personal representatives to distribute in accordance with a list of ‘wishes’.

Thirdly, it is important that the Will is seen, read and understood by the personal representatives. If in doubt, a lawyer can help with the interpretation of the Will.

Not only will these efforts make the administration of the estate more straightforward, it will hopefully reduce the risk of a family fall out!