Whether it’s your prized animals or something else, here are some ideas to consider when including unique assets in your estate plan.
When it comes to developing an estate plan, you likely think of documenting your wishes for assets such as stocks, jewelry, homes, and business interests. But what about more unusual assets — such as a herd of 75 horses?
“One of the things that people don’t think about from the view of unique asset planning is animals,” says Allison Gregory, a private wealth advisor with Wells Fargo Private Bank. “I’ve seen situations where the people inheriting animals as part of an estate had no idea what to do with them, didn’t want them, or received no money designated to care for them. As a result, the animals did not receive proper care or were sold in a fire sale to the highest bidder-which is an outcome their owner never would have wanted.”
In the case of the 75 horses mentioned above, however, the owner had created a well-thought-out estate plan that took into account both the animals and their heirs. The owner had planned well, and had set aside enough liquidity to help provide for the horses’ well-being as well as support family members entrusted with their care. The owner even left a detailed file on each horse to outline their needs and who would be their first choice to sell to in the future.
Gregory says that smooth transitions such as this are the result of carefully reviewing an estate plan to make sure nothing gets overlooked — whether it’s living things such as pets or livestock or other uncommon assets. Here, she shares her top considerations when it comes to seeing that your wishes are fulfilled and that your unique assets get the care they deserve.
Before you put any details into your estate plan, take time to think through all the potential issues associated with each asset.
Explore potential risks and how to mitigate them
Before you put any details into your estate plan, take time to think through all the potential issues associated with each asset. For example, would that faraway vacation home be difficult to maintain? Are you leaving enough liquidity for your heirs to properly care for it over time? What if only one heir can really use it while the others cannot? Will that create unnecessary friction in the family later?
“Helpful consultants in determining potential risks are an estate attorney, tax advisor, especially one with specific experience in the area of unique assets, and your wealth planner,” adds Gregory. “Then, once you’ve outlined what you see as risks,” Gregory says, “you can go about detailing related expenses, getting input from your heirs, and hearing their potential concerns. At that point, you can consider how the estate plan can solve for the need.”
Prepare contingency plans
Family members who receive assets, whether unique or common, often want to honor the wishes of a loved one who has passed away. But in the case of unique assets, beneficiaries sometimes don’t have the finances or skills to maintain those valuables, which often end up getting sold quickly for a fraction of their value. “That’s why working on a contingency plan with your wealth planner, particularly for expensive and unique assets, such as a multimillion-dollar art collection, can be essential,” says Gregory.
Don’t overlook digital assets
Digital assets, including multimedia files (including photos, music, and video), copyrighted materials, and credits in customer-reward or frequent-flier programs should be part of your estate plan. Also include digital assets such as social media accounts and content on sites like Twitter, Instagram, LinkedIn, and Facebook.
“For example, if you have an influential blog or an Instagram account where you receive revenue based on followers,” Gregory says, “I highly recommend making sure that you discuss this with an intellectual property attorney to understand how to protect that asset and preserve its value upon your passing.” Gregory also recommends speaking to your estate planning attorney, who may suggest adding a fiduciary authority to the will or trust to preserve digital assets upon death.
At a minimum, having a plan for your digital life after death could help safeguard your estate from fraud, identity theft, or other potential misdeeds. “Make sure that the person or entity that you want to manage those profiles after you are gone, has the necessary passwords and authority to do just that – even if it is simply to shut them down.”