The Lawletter Vol 40 No 6
When distributing a probate estate, it is important to determine whether particular assets are tangible or intangible property where the will's language distributes these classes of property to different beneficiaries. While many assets may be sorted based upon common-sense principles, other assets present analytical difficulties. One such problematic asset is gold formed into bars, bullion, and coins. Some laymen would classify these precious metal assets as money, others as collectibles, and it is not intuitive whether such gold objects constitute tangible assets (such as a chair or a computer) or intangible assets (such as bank account deposits or stocks).
Luckily, this question is handily resolved by employing the general definition regarding how to differentiate tangible from intangible personalty. Nationally, in both the probate and the tax contexts, gold bullion and bars, as with cash currency or coins found amongst the possessions of a testator at death, constitute tangible personalty because (a) they can be physically held, and (b) the object held has intrinsic, rather than representative, value. By contrast, the valuable component of intangible personalty, such as securities, a bank account balance, or a promissory note, cannot be held as an object but is represented by some legal document or right of access. Under tax law, "'intangible property' means such property as has no intrinsic and marketable value, but is merely the representative or evidence of value, such as certificates of stock, bonds, promissory notes, copyrights, and franchises." State v. Sanders, 923 S.W.2d 540, 542 (Tenn. 1996) (internal quotation marks omitted).
Thus, gold bullion, bars, and coins clearly constitute "tangible" personalty because (a) they can be held, and (b) they have inherent intrinsic value. A leading case on this topic comes from Pennsylvania, demonstrating that such assets are to be passed among the estate's tangible personalty:
The gold and silver coins clearly are tangible property, in that they can be felt or touched. Also, because the coins have both intrinsic and marketable value in and of themselves, they cannot be considered intangible property, without more. The coins are more than the mere representation or evidence of value, as opposed to stock certificates or paper currency. See Lawson Estate, 28 D & C 2d 642 (Phila.Co.1962) (coin collection passes through provision of will regarding tangible personal property; coin collection is not cash).
In re Macfarlane's Estate, 459 A.2d 1289, 1292 (Pa. Super. Ct. 1983) (footnote omitted).