Text or Call Today 571-403-2619

Blog

Valuing Hard To Value Assets

Posted by Aubrey Carew Sizer | Apr 06, 2022

An estate plan should include all of the estate owner's assets, both liquid, and non-liquid. While liquid assets like bank accounts have a set value, non-liquid assets like real estate may need to be appraised to determine an estimated value. Valuing hard-to-value assets can cause serious headaches for those in the process of estate planning. However, an experienced estate planning lawyer can help their clients accurately value all of the assets of their estates and construct an estate plan that meets the client's needs.

If you are developing your first estate plan or updating an existing one and have concerns about hard-to-value assets, the Law Office of Aubrey Carew Sizer PLLC is here to help. Contact our veteran Virginia estate planning lawyer today at (571) 403-2619 with any estate planning questions you may have.

What Types of Assets Are Hard to Value?

The Office of the Comptroller of the Currency (OCC), an independent branch of the United States Treasury, has identified the following categories of hard to value assets:

  • Real estate - Real estate holdings often account for a significant portion of an estate, as homes are often the most valuable non-liquid asset in an estate.
  • Closely held businesses - Defined as a business owned by one person or a small group of people, which can be organized as a closely held corporation, partnership, sole proprietorship, or limited liability company.
  • Mineral interests - The ownership of oil, gas, and solid minerals on a property. Those with mineral interests often include these assets as part of a trust.
  • Loans and notes - This category covers several types of loans and notes often held as assets in fiduciary accounts, such as mortgages, secured real estate notes, unsecured loans, and employee benefit participant loans.
  • Life insurance - A life insurance policy must be valued before it can be transferred. The estimated value of the policy is calculated by subtracting the reserve value at the date of the final premium payment from the projected reserve value at the date of the next premium.
  • Tangible assets - Physical objects such as household furnishings, jewelry, and vehicles, which often have both financial and emotional value for the owner.
  • Collectibles - This category includes art, antiques, stamps, coins, and other valuable collectibles that will need to be appraised before being distributed.

Incorporating Hard to Value Assets Into an Estate Plan

Any well-rounded estate plan should include a comprehensive list of all assets, including the hard to value ones. Accounting for these non-liquid assets can help ensure that the needs and preferences of the estate owner are fulfilled following their death or incapacitation. Additionally, incorporating these hard-to-value assets can help prevent complications for family members, such as disputes over whether the assets should be sold or distributed, and who should receive the assets.

Valuing hard-to-value assets after the owner's death can be simplified if the owner has a well-structured estate plan that accounts for all of their assets. Estate owners can meet this goal by compiling a list of all of their assets and having these assets professionally appraised while they are still alive. Additionally, the estate owner should specify who should receive each asset at the time of their death or incapacitation. If the estate has debts at the time of the owner's death, some of its assets may be sold and the funds may be used to settle the debts. The experienced estate planning lawyers at the Law Firm of Audrey Carew Sizer PLLC can help with the process of adding hard-to-value assets to an estate plan.

Adding Hard to Value Assets to a Trust

For many estate owners, especially those with a higher net worth, including assets in a trust has many benefits. Both liquid and non-liquid assets can be included in a trust, which can help ease the transfer of these assets when the estate owner passes away or becomes incapacitated. Assets included in a trust can often bypass the long and cumbersome probate process, which can take months or even years to determine how an estate's assets will be distributed.

Additionally, trusts can be used to lessen the burden of estate taxes for wealthy individuals. While the Virginia Tax Bureau does not require the payment of state estate taxes, federal law requires estate taxes for those valued at over $11 million. When the owner of an estate passes away, the assets of the estate will be used to pay for debts and estate taxes. If the estate has insufficient liquid assets to cover these taxes and debts, nonliquid assets may be liquidated to raise the needed funds. Trusts can also include provisions that outline how funds can be raised without the need to sell off hard-to-value assets like homes, businesses, and collectibles.

Contact an Experienced Estate Planning Lawyer To Learn More

Valuing hard-to-value assets can be one of the most difficult parts of estate planning. Individuals who hold several different types of nonliquid assets often run into a variety of complications when constructing their estate plans. Failure to accurately appraise the value of these assets can cause serious difficulties for beneficiaries named in the estate plan. Additionally, an inaccurate appraisal could undervalue the true worth of nonliquid assets. This could cause serious issues when heirs attempt to sell inherited nonliquid assets, as they could struggle to receive fair value.

An estate plan should be as comprehensive as possible, accounting for all types of assets and ensuring that these assets are distributed correctly when the owner dies or becomes incapacitated. Estate owners often seek guidance from experienced estate planning lawyers who understand the complex nature of hard-to-value assets, how to assign a fair value, and how to effectively incorporate these assets into an estate plan. At The Law Office of Aubrey Carew Sizer PLLC, our Virginia estate planning lawyer helps clients draft well-rounded estate plans that address all of these concerns. Contact us at (571) 403-2619 to learn more about adding hard-to-value assets to an estate plan.

About the Author

Aubrey Carew Sizer

Aubrey Carew Sizer is the Principal Attorney of The Law Office of Aubrey Carew Sizer PLLC, a Northern Virginia law firm providing representation for Wills, Trusts, and Estate Planning, Long-Term Care Planning, Guardianship and Conservatorship, Special Needs Planning for the Disabled, and Probate, Estate and Trust Administration.

Services

The Law Office of Aubrey Carew Sizer PLLC provides customized and affordable estate planning (including wills, living trusts, powers of attorney, and advance medical directives); elder law services (including long-term care planning, special needs planning for the disabled, and guardianships and conservatorships); probate, estate and trust administration (including advising executors and administrators of estates about post-mortem planning and the local probate process in Virginia), as well as general aging and disability advice in Northern Virginia, including but not limited to Arlington, Alexandria, Ashburn, Bristow, Burke, Centreville, Chantilly, Gainesville, Fairfax, Falls Church, Haymarket, Herndon, Leesburg, Manassas, Manassas Park, Reston, Springfield, Sterling, and throughout Loudoun, Prince William, and Fairfax counties.

Menu