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Chattels – What are they and what do I do with them in my Will?
The term “chattels” invokes the language of a time when Britain still had an Empire and people were concerned with what would happen to things such as their carriages and horses. The statutory definition of personal chattels was updated in 2014 from such delightful but archaic language but the principle remains the same. Any personal goods other than “money, securities for money or property used solely or mainly for business purposes” falls into the definition of chattels.
When a person dies, an accurate valuation of all of the assets to which they were entitled at the date of their death must be obtained which includes their chattels. Whilst in many cases the value is fairly low or even nil, if a return for Inheritance Tax purposes is being made to HM Revenue & Customs then they will expect to see that the Personal Representatives of the deceased have made a concerted effort to obtain a valuation of the assets (in our experience, a report from a suitably qualified valuer will suffice). If no valuation is offered, they will expect to see an explanation as to why not. It may be that the chattels have no value, especially if they are old and/or damaged but and if it must be made to account for them.
Once the value of the chattels has been ascertained, the Personal Representatives then need to distribute them. If a deceased’s Will is silent on what is to happen to their chattels, then they will fall into the residue of the estate to be split between the residuary beneficiaries. This will mean that any one of these beneficiaries has as a good claim on a particular chattel as another. In my experience I have been party to some quite bitter arguments about items which have very little or indeed no financial value but carry a significant weight of emotional attachment.
Many people make specific gifts of items in their Wills such as a piece of jewellery to a specifically named person. This remains an excellent way of ensuring a specific item reaches the intended beneficiary, but disposing of all one’s chattels in this manner would result in an extremely lengthy Will which would then have to be altered every time you decided to give an item to someone other than the person named in the Will, or indeed disposed of that item and needed to make a replacement gift.
A more flexible way of dealing with this is to leave the chattels to the Executors of the estate on a short term trust with directions that they should distribute the chattels in accordance with any written or oral instructions communicated to the Executors or in accordance with any markings on any items which may be found at the date of death (this could be something as simple as Post-It note attached to a piece of furniture). However, the most sensible way of dealing with this is to address a letter to the Executors setting out who is to receive what. Because this letter does not form part of the Will, it can be changed as many times as you like without affecting the overall legal framework of the Will itself.
Any chattels which are not specifically disposed of by the Letter of Wishes would then fall into the residue of the estate and the Executors can either distribute these to beneficiaries or sell them and pay over the cash proceeds of sale.
The flexibility afforded by this arrangement means that you are able to keep abreast of changes in your personal circumstances and in the nature of your chattels without having to redraft the Will to take this into account. Of course, this does not stop you making specific legacies in the Will and it is often a case that a Will is drafted to leave one or two particular items to specified beneficiaries with the rest of the chattels passing into the mini-trust.
In this way, a lot of the discussions and arguments can be avoided over the distribution of chattels, dealing with them in as orderly a fashion as is possible.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances. Longmores Solicitors LLP are not regulated by the Financial Conduct Authority and are not authorized to provide any form of financial advice.