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 horses?
“An often overlooked asset in estate planning is your animals,” says Harry Drozdowski, a Senior Wealth Strategist with Wells Fargo Private Bank. “It is not uncommon for a client to assume someone will take care of their animals in the same way they did, but in reality the people inheriting animals may not know what to do with them, may not want them, or may not have the resources to care for them. This could result in the animals being neglected or sold to the highest bidder, which is an outcome the owner may have never wanted.”
In the case of the 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 a conversation with several possible caregivers before determining who should inherit the ranch with several horses and had set aside enough liquidity to help provide for the horses’ well-being as well as support those entrusted with their care.
Drozdowski 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, he shares his 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?
“Your estate planning attorney, tax advisor — especially one with specific experience in the area of unique assets, and wealth planner can help you identify possible risks associated with your unique assets,” adds Drozdowski. “Once you have identified the risks, you can together create a detailed plan to solve for those risks as well as communicate that plan with your heirs to make sure everyone is on the same page with those solutions.”
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. “Even the most well-thought-out and communicated plan can encounter a roadblock, and this is especially true when planning for expensive and unique assets, such as a multimillion-dollar art collection. Having a contingency plan can be essential in these cases,” says Drozdowski.
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.
“It is crucial to discuss assets such as an Instagram account that receives revenue based on followers with an intellectual property attorney to understand the best way to help protect and preserve the value of these assets upon your passing,” Drozdowski says. He 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. “Ensure that you designate a person or entity to manage the account after you are gone and give them the passwords and authority necessary to carry out your wishes — whether that is to continue the account or shut it down.”