One of the trickiest items that we must deal with as estate planners is to help clients transfer illiquid assets. Illiquid assets can include:
- retirement plans
- ownership in a family business
- real estate
- collectibles (such as artwork, baseball cards and comic books)
- expensive vehicles
- and even animals (such as thoroughbreds and show pets)
Illiquid assets are tricky to plan with because they almost always have huge built-in gains, sometimes multiple people want the same asset, the asset must often be sold to pay for taxes and they usually require special maintenance or care. A client can face additional complications when most of a client’s wealth is tied up in a single asset and the client wants to benefit multiple heirs.
Each family requires a custom solution, but often the solution can be found in tried an true estate planning techniques, such as:
- a life insurance trust (so that you can give the illiquid asset to one heir and cash to another heir)
- a buy-sell agreement (for a family business)
- a pet trust (to deal with a beloved family pet)
- promissory notes
- and even charitable trusts
While we can not help you decide which of your heirs should receive your assets, a good estate planning attorney can help you make sure that they pass in a practical and tax efficient manner.