Splitting up money is easy. Splitting up an antique car or a vacation home isn’t. Unless you plan ahead by answering these three questions, your family could be in for some strife.
One of the largest transfers of wealth in our nation’s history is now getting underway, as boomers approach their later years and are starting to prepare to move their assets to the next generation, reports Kiplinger in the article “Estate Planning Answers for ‘Hard’ Assets Like Art, Heirlooms.”
It’s one thing to transfer stocks, bonds, cash and other assets that are generally considered “liquid.” However, it different when the assets are “hard,” like real estate, art, and jewelry. Most families don’t keep a comprehensive inventory of these assets, their value may be unknown and chances are good family members have different ideas regarding how they want to have them distributed.
If all of this is not enough, what about the difficulty of talking about what the current owner would like to see happen to the asset.
So, what happens? In many cases, these hard assets end up being overlooked and sometimes undervalued.
A better solution would be to create a formal plan that begins with the owners, the family advisors and, depending on the nature of the asset, professional appraisers.
Here are three key questions to keep in mind:
What’s it worth? You need to establish any asset’s fair market value. That number needs to be appraised by an objective and properly credentialed appraiser, who is knowledgeable in their area. For instance, a jewelry collection that has grown from its original value when first acquired, may have doubled in value over the decades. Select an appraiser who is certified by an accredited organization. The cost of the appraisal will be well worth the fees.
Who wants what? You may be emotionally vested in an heirloom that came to you from your great grandfather, but your kids may be more attached to the family home. If more than one sibling wants an asset, you’ll need to figure out a way to share it. If one child insists on keeping the family vacation home, for instance, but the other two aren’t interested, you might need to set up an equitable buyout solution.
If the asset is artwork or a collectible, remember that these items are often cyclical in popularity and so is their value. One individual who inherited a collection from his parents knew that the artist was a family friend, but had no idea of the value, if any, of the collection. His timing was sheer luck—he wanted to sell exactly when this artist was popular. Three years later, he may not have been so well rewarded.
Can it be passed on to the next generation? An estate planning attorney will be able to assist you with the best way to pass on illiquid assets. They may be put into a trust, a family partnership or an LLC, and the transfer of ownership can be done in a tax-efficient way. If you really don’t think your heirs appreciate the asset, then you can sell it for a fair price, pay the necessary taxes and gift the tax.
Conversations about these kinds of assets can become emotional, because the assets have sentimental value. However, don’t let that fact dissuade you from passing them along in a way that benefits everyone, addresses potential conflicts and lets you and your family prepare for the future.
Reference: Kiplinger (Nov. 5, 2018) “Estate Planning Answers for ‘Hard’ Assets Like Art, Heirlooms”
“On the threshold of retirement, we finally decided to quit thinking we could self-prepare the requisite documents. We had previously had only a very simple will. We needed the necessary legal (including updated will) & health care docs but didn’t want to deal with the time & complication of legalese. Cindy made the process relatively painless. She took the time to explain and answer questions without trying to upsell services. We were done in 2 meetings plus the reading of emailed drafts. In addition to preparing the documents, Nelson Eldercare will be there when our adult children need advice on executing the plans we’ve put in place.So glad it’s behind us and would recommend Cindy and her helpful staff.”
Cindy and her company treat their clients like family. Nelson’s offers clear, direct, and honest guidance in planning for your families security and future. No one wants to actively sit down and make these decisions, but Nelson’s makes this process seamless. I was so impressed with their willingness to answer all questions big or small. So glad I made the decision have them help my mom and dad and now me. You can’t go wrong with Nelson’s Elder Care Law.
The very best elder law attorney and staff anyone could ever ask for! I have referred a number of clients to Cindy and she never disappoints. She is kind, caring, and extremely thorough in making sure everything is completed as it should be. I highly recommend Cindy for anyone needing lawyer services; she truly goes above and beyond for every client she helps and has had a huge impact in so many peoples’ lives. Thank you, Cindy and staff, for everything that you do- I’m so glad to know you!
I heard Cindy’s presentation at a Senior Luncheon at my church, and was very impressed. She helped my daughter and me understand many aspects of elder law. Josh has also been very helpful in my planning to enter an independent living situation . I have told many friends about them.
Cindy and the Nelson Elder Care Law team are trustworthy and helpful. They are the experts in elder care law. At Leaf Cremation, we entrust our families to the care of the Nelson team when their services are needed.