It is generally accepted that "personal property" refers to all property aside from real property. But in California, that isn't always the case when it comes to making gifts of your property in a will or a trust. California courts actually look to the language used in a document making a gift of "personal property" or "personal belongings," and sometimes to other evidence, to interpret the scope of property intended when using such a term in an estate planning document.
There is no statutory definition of "personal property" in the Probate Code, nor is there one clear definition in case law. Of course, if a document is clearly drafted, it would include a definition of what is intended. But if that is not the case, then courts consider the facts specific to each case when interpreting terms like "personal property." The court first considers the language used in the document, and sometimes admits other evidence, in order to determine the testator's intent. There is a long history of courts concluding that terms like "personal property" or "personal belongings" can mean anything from small items of nominal value to, in one case, everything that a testator owns, real property included. A few common factors the court considers are below:
Whether the document was drafted by an attorney. In these instances, courts will assign a more technical meaning to the terms used. In Estate of Hampton (1968) 262 Cal.App.2d 532, the court held that because the will at issue was attorney-drafted, a gift of "personal belongings" should be interpreted "in the limited technical sense of chattels susceptible of identification and manual delivery." In Hampton, that interpretation meant that "personal belongings" included jewelry and a few tangible personal effects valued at approximately $320.
Whether there is a residue clause in a document. A will or trust may make specific gifts — meaning, it identifies either a specific item or a certain amount of money to go to a particular person. After specific gifts are made, a residue clause makes a gift of everything else (the "residue.") A residue clause could leave everything to one person, or could divide the residue in percentages to a few people. So, if a document does not contain a residue clause, but does contain a clause making a gift of "all of my personal property," the court is inclined to interpret that gift as a much broader one than the same gift in a document that also contains a residue clause. The court in Estate of Olson (1956) 144 Cal.App.2d 694, noted a clear example of this. In a will, the testator left a gift of "all my personal belongings" to her daughter, a gift of one dollar to her son, and no other provisions. The court held that, in this instance, it is clear that the testator intended to avoid intestacy, and to essentially disinherit her son, so "all my personal belongings" had to be interpreted to mean everything the testator owns, excluding real property. In a more surprising decision, the court in Estate of Olsen (1935) 9 Cal.App.2d 374, considered a will that made several pecuniary gifts, and then "all my personal property" to one beneficiary, but no residue clause. The court found that the testator had a clear plan to dispose of all her property, and therefore interpreted the gift of "all my personal property" to mean everything the testator owned – including real property.
The nature of the gift compared to the other gifts in the document. Even if there is a residue clause, the court has restricted the meaning of a gift of "personal belongings." For instance, in Estate of Johnson (1970) 5 Cal.App.3d 173, the decedent's will contained a few small specific gifts of specific dollar amounts, a gift of "all my personal belongings and effects," and a residue clause. After the testator died, a coin collection and stamp collection were found in her home. Because the will contained a residue clause, the court was not inclined to interpret a gift of "all my personal belongings and effects" to mean everything except the specific gifts, as in the Olsen case, if the court had done that, then the beneficiary of the residue would not actually receive anything. So, the court was left to decide whether the coin collection and stamp collection counted as "personal belongings and effects." In determining the meaning of that term, the court admitted evidence regarding why the testator kept the coin collection and stamp collection to determine whether they should be considered part of the "personal belongings and effects" or whether they should be part of the residue of the estate. The testator's predeceased husband was the one who collected the coins and stamps, and it appeared from the evidence that the testator kept them solely for their monetary value, and sold parts of them for cash during her lifetime. The court also noted that most of the testator's personal property was of very small value, and that the residue had a significant value. Based on that, the court determined that the testator intended to give the beneficiaries of the "personal belongings and effects" lower-value gifts, and leave the more valuable gifts to the residue beneficiaries. To that end, the court held that "personal belongings and effects" included most of the property in the testator's home, but excluded the coin and stamp collections.
The take-home message from these cases is that there is no one interpretation of "personal property" or "personal belongings," and that courts emphasize determining the testator's intent when using such terms, even if it results in a wide variety of how those terms are interpreted.
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