Potentially Problematic Assets in Estate Planning

Leaving an inheritance for your family is one of the best ways to create an enduring legacy and honor the ones you love. But not all assets are created equal. There are complexities and uncertainties attached to many assets that make it both difficult to create an estate plan and execute it later. Making sure your estate is distributed as you see fit, with the least hassle possible, is a goal many clients to come us seeking.

Three possible difficulties with your estate assets

Certain assets are fairly straightforward and lend themselves to relatively simple estate planning. These include liquid assets like cash, stocks, and bonds. Other items present potential challenges that can make an estate plan more complicated. No matter the nature of the asset, our experienced attorneys can help you decide what happens to it after you pass away.

Some of the more complex or unusual assets that your estate plan might cover include:

  • Real property
  • Closely held (e.g. family) businesses
  • Personal property such as household furnishings
  • Jewelry
  • Vehicles
  • Artwork
  • Collections
  • Firearms
  • Mineral rights
  • Loans and notes

Generally, these and other assets present three potential roadblocks to creating a sound estate plan that can be easily carried out after the testator’s death:

  • Valuation of the asset
  • Which heirs might want the asset (and, related, whether any might later fight over it)
  • How the asset can best be passed on

We will examine each of these in turn.

What is the asset worth?

It’s one thing to ascertain the value of stocks; it’s quite another to figure out what a rare art collection is worth. Any estate plan must account for the value of the assets it passes on. Certain assets will accrue in value from the time they are first acquired until the death of the testator. This means you may need to update both insurance coverages and estate plans as values change.

One of the most critical steps to take in this respect is conducting an appraisal of items that do not lend themselves to an easy monetary valuation. An experienced appraiser can help you understand the true value of the asset so you can design your estate plan accordingly.

Who wants the asset?

Liquid assets like cash and bonds don’t usually have sentimental value attached to them. More personal items like collections, household furnishings, and even vehicles do. Obviously you don’t want to leave behind a plan that fosters resentment.

Some items can be divided among heirs. One might inherit a group of rare coins from your collection, for instance, while another heir inherits the rest. Other assets can only realistically be acquired by one heir, such as a vehicle. As you make your estate plan, carefully consider such questions as:

  • Who (if anyone) has expressed interest in the asset?
  • Who is best suited to take care of and preserve the asset?
  • Is there a way to divide the asset among more than one heir?
  • If division of the asset isn’t possible, is there another one the heir can take instead?

How should you pass on the asset?

A knowledgeable estate planning attorney can discuss various methods for transferring your assets as smoothly as possible. To avoid emotional issues and conflict over certain sentimental items, you might want to consider selling the items and giving cash instead. For other assets, there may be considerations such as tax consequences that necessitate another means (like a trust) of distributing an asset.

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