A big part of estate planning is deciding how you’ll pass along your assets— specifically, deciding which assets to leave to which family members. The more assets you have, of course, the more challenging this becomes.
There are a few different factors to consider as you determine how to distribute your assets. In this post, we’ll weigh three basic categories: liquidity, sentiment, and tax planning.
We’ll start with liquidity. A liquid asset is something that can very easily be converted into cash; an estate that’s primarily made up of illiquid assets—things that are harder to sell—may lead to some complications for your family members.
In your estate planning, it’s generally best to liquidate as many assets as possible. There’s nothing necessarily wrong with leaving expensive paintings or exotic cars to your family members, but be aware that doing so can create more work and more expense for your survivors as they seek to administer your estate.
Some assets may come with strong memories attached to them—and with great sentimental value. Often, this sentimental value is greater for some family members than for others.
The best approach is to talk with your family members about the assets that mean a lot to them, and try to sort things out together—minimizing the risk of contentious situations after you die.
A final consideration is tax planning. Most assets will come with the same tax implications for your heirs—whether they are hard assets or virtual ones. A major exception is retirement accounts, such as IRAs; usually, it’s best not to leave these to your survivors, as they can come with hefty tax burdens.
These are simply intended as guidelines, of course—and if you’re ready to delve into some specific assets in your estate, reach out to the seasoned estate planning experts at Singh Law Firm today.