Who gets Mum’s engagement ring?
Chattels Lists, Gift Lists and the choice between flexibility and certainty
An engagement ring may represent only a small part of an estate’s financial value, but become one of its most contested assets.
The same can be true of a grandfather clock, a piece of artwork, a family collection or even tickets from the 1989 Grand Final.
With Rosh Hashanah beginning tonight, and Melbourne enjoying an historic NFL match alongside a weekend of finals football, it is a timely moment to think about family, tradition and what we pass from one generation to the next.
So how should clients record who is to receive their personal belongings?
There are generally two approaches: a Chattels List or a Gift List. The essential choice is between flexibility and legal certainty.
Chattels List: flexible, but not binding
A Chattels List records the client’s wishes about who should receive particular personal belongings without making each item a binding gift under the Will.
It is usually prepared as a separate document, signed and dated, and kept with the Will or somewhere known to the executor.
The Will may authorise the executor to distribute personal belongings after considering the client’s most recent Chattels List. However, the list itself is generally not legally binding. Where the Will gives the executor discretion, the executor retains the final decision. The principal advantage is flexibility.
The client can add or remove an item, or change the intended recipient, without updating their Will every time their belongings or wishes change.
A Chattels List may be suitable for:
belongings of modest financial value;
items unlikely to cause disagreement;
belongings that may be replaced or disposed of over time; and
clients who value flexibility and trust their executor to make the final decision.
Gift List: greater legal certainty
A Gift or Bequest List is more appropriate where a particular person must have a legally binding entitlement to an item.
The gift must be properly incorporated into the client’s Will and comply with the formal requirements for a Will. Subject to estate debts, expenses and other legal requirements, the executor must then give effect to it, usually as a priority before the remainder of the estate is distributed.
This provides greater certainty, but less flexibility.
Changing or removing the gift will generally require the Will to be updated. If the client no longer owns the item when they die, the gift will ordinarily fail unless the Will provides otherwise.
A binding gift may be preferable for:
items of substantial financial value;
belongings with particular sentimental importance;
family heirlooms;
items that more than one person may expect to receive; and
circumstances in which the client does not want the executor to have a discretion.
An engagement ring intended for a particular child, a valuable artwork or an important family heirloom may therefore be better dealt with as a binding gift.
Which approach should the client choose?
The practical test is straightforward:
Choose a Chattels List when flexibility matters more and the client trusts the executor to exercise discretion.
Choose a Gift List when certainty matters more and the client wants the intended recipient to have an enforceable entitlement.
The same item should not appear in both. If there is an inconsistency, a binding gift contained in the Will will ordinarily prevail over wishes expressed in a non-binding Chattels List.
Why advisers should ask the question
Personal belongings are easily overlooked because estate planning conversations naturally focus on property, investments, superannuation and business interests.
However, it is often the personal belongings, not the major financial assets, that carry the greatest emotional significance and expose unspoken family expectations.
Useful questions include:
Has anyone already been promised a particular item?
Could more than one family member expect to receive it?
Is the item financially valuable, emotionally important, or both?
Does the client want flexibility or certainty?
Does the executor know where the client’s current instructions are kept?
The objective is not simply to create a list. It is to select the right legal treatment for each item and reduce the risk of misunderstanding or conflict after the client’s death.
Inherit guides clients and advisers through these decisions as part of a structured estate-planning discovery process. The final legal advice and documents are completed by a lawyer.
What personal belongings do you find are most likely to create disagreement within families: jewellery, artwork, collections or something else?
This article contains general information only. The legal treatment of gifts and separate statements of wishes depends on the wording of the Will and the applicable Australian jurisdiction. Clients should obtain legal advice about their circumstances.
