In the domain of estate planning and inheritance law, one might come across the term “chattels” quite often, especially in instances where assets are distributed when someone dies without a valid will (intestacy) or when detailed instructions are stated by a willmaker for their personal belongings. It is essential to understand what chattels are and how they are addressed in estate law, for both individuals constructing their wills and for legal professionals steering across this area of intricacy.
What are chattels?
To put it simply, ‘chattels’ refer to personal property or movable assets that are not land or real estate. In legal terms, chattels are tangible items that can be physically moved and transferred from one person to another, such as goods, furniture, or possessions. They are different from real property, which includes fixed assets, like land or buildings. Chattels also consist of items like jewellery, vehicles, art pieces, or family heirlooms.
The Administration and Probate Act 1958 (Vic) defines “personal chattels” as including:
“carriages horses stable furniture and effects (not used for business purposes) motor cars and accessories (not used for business purposes) garden effects domestic animals plate plated articles linen china glass books pictures prints furniture jewellery articles of household or personal use or ornament musical and scientific instruments and apparatus wines liquors and consumable stores but does not include any chattels used at the death of the intestate for business purposes nor money or securities for money”.
The main feature of chattels is how easily they can be transported, along with their clear difference from real property. The above definition also distinguishes chattels from items used in the conduct of a business. When a person passes away, the chattels they owned become part of their estate and must then be distributed in accordance to the terms of their Will or, in cases of intestacy, in accordance with the laws of succession.
Why is it essential to know the relevance of chattels?
Chattels possess great significance when an estate is being distributed after death, as they can have a substantial effect on the deceased person’s family and loved ones. An individual may normally leave directions as to how certain items are to be distributed, often to safeguard personal belongings, sentimental items, family heirlooms, or the like.
In situations of intestacy, Victorian law gives directions for distributing chattels to guarantee that personal property is justly dispensed according to the family relationships. Usually, chattels are given to the surviving spouse or children. This approach is taken to make sure that the personal items of the deceased person are passed on to those that were closest to them, or those who were most likely meant to inherit the items if there were a Will.
Cases addressing chattels
Numerous courts have had to identify whether specific items would constitute chattels. In the case of Smith v Smith (2012), a dispute arose over a family heirloom which held significant sentimental value. The heirloom, a painting, was categorised as a chattel but such characterisation was contested by the heirs. The Court held that despite its value and significance to the family, the painting was a chattel due to its mobility. A chattel is a moveable item that is not fixed to the property.
Other items that are much larger and less mobile may be more challenging to distinguish. McCauley v McCauley (2007) addresses this issue. This case concerned a dispute over whether certain fixtures and improvements on a property, being a pool and decking, should be considered as chattels or part of the real property. The court held that these items were not considered as chattels due to their permanent attachment to the land. It was highlighted that an item that is permanently fixed to the land or a building revokes itself from being considered a chattel. The pool and decking in this case were intended to stay in place as part of the property and therefore were considered as real property.
Bequeathing chattels to beneficiaries
It is essential to note that a testator (Willmaker) possesses the choice to bequeath specific chattels in their Will, such as the examples mentioned previously. Alternatively, the testator has the option to refer to a non-binding list that is kept separate to their Will, outlining the distribution of the items. Granted that the list is not legally binding, it does supply direction and guidance to the executor to aid in ensuring that chattels are distributed in accordance with the testator’s intentions.
In many cases, clients would bequeath chattels to a group of beneficiaries, like their children, in order for them to divide between themselves. While this approach works well when the beneficiaries can easily come to an agreement on how to divide them, it is still best for the testator to provide some general guidance in order to lessen the chance of possible disputes down the line. We recommend that testators include a specific procedure as to how chattels are to be divided in the instance that beneficiaries cannot come to an agreement, such as ‘drawing straws’ to determine the order in which beneficiaries can select chattels.
Testators may also consider whether a beneficiary’s portion of the residuary estate should be modified according to the value of the chattels they have inherited. To give an example, if one beneficiary receives an item more valuable than the other, the testator might choose to reduce their share of the residual estate to ensure the distribution among all the beneficiaries avoids any unintended inequalities.
Conclusion
The classification of property as chattels is crucial for determining how items will be distributed after someone’s death. Courts look into the nature of the property and the circumstances in question. Various aspects would be considered by the Court such as the item’s use, value, and relationship to the real estate. By understanding the importance of chattels and addressing them appropriately, legal practitioners can prevent potential disputes between family members.