Estate Planning May 29, 2008, 5:00PM EST

Estates: Divvying Up the Silver

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To compensate her other grandkids, she took out a life insurance policy, paid for by the grandchild who got the ring, and named the other grandkids as beneficiaries.

Rather than just assume your gift will be well received, consult with your heirs. "Let them know your wishes, but also find out what they want," says Linda Hetzer, co-author of Moving On: A Practical Guide to Downsizing the Family Home (Stewart, Tabori & Chang; $15.95). "You might say to your daughter, I'd love to leave you the china,' but she may have no interest." If you create a list outlining what goes to whom, check with an attorney to make sure your instructions will be legally binding. In some states, such as California, a list drawn up outside of a will may not hold up if there is a challenge. You might need to incorporate the document, or a reference to it, in your will.

Leaving a simple list is the most obvious approach, but many parents want to give the division of assets a more personal touch. Gallo recalls a terminally ill client who put colored dots on her belongings, with each heir assigned a different color. When she died, he says, the family "had a treasure hunt. They looked behind the painting and said, Oh, Mary, she left this to you.' It turned out to be almost a celebration of her life." Hetzer's mother affixed labels to valuables. "They were in her handwriting, explaining, for example, that this was a pin given to her mother by her [mother's] husband when she had her first child. It was wonderful to come across that." Others make videos, in part to document historic, sentimental, or monetary value of items. To prevent hurt feelings or, in a worst-case scenario, legal challenges, it's vital to explain the rationale for your decisions. Video works well because "it's as if the parent is talking from beyond the grave," says Gallo. "No one can question their intent."

LETTING HEIRS TAKE THE LEAD

You may prefer to have your heirs work out who gets what. Some families hold auctions where, after belongings are appraised, heirs are allotted equal sums to bid with. The value of the items won is then deducted from the bidder's inheritance. A variation on that approach was used by one Texas family to divvy up belongings their mother wanted to give away before she moved out of her home of 45 years. While her four kids—the heirs—hired a professional to appraise the furniture and silver, a granddaughter looked up the prices her grandmother's china was fetching on replacements.com, which sells thousands of patterns. A complete inventory, along with photographs, was then mailed to the heirs. When the four heirs and grandchildren gathered in Texas, "everyone was prepared," says the granddaughter.

The heirs totaled the appraised values and divided by four, giving each child an equal number of dollars to "spend." The grandchildren "could lobby their parents for specific items," says one granddaughter, who received Spanish stirrups. "We used to put them on and clomp around the house. It wasn't an expensive item, but we all wanted them."

The four children drew straws to determine who would go first, and then reversed order. The next day, grandchildren were able to pick over the remnants. Within four hours, the furniture, china, crystal, and sentimental items were gone. That left the silver. The next night, heirs gathered, and one gave a brief tutorial on silver makers. Over cocktails, they made their silver selections. "It was fun," says the granddaughter. "Not everyone got everything they wanted, but it was equitable. There was no acrimony."

Tergesen is an associate editor for BusinessWeek in New York .