It’s all too easy to sit down with your team of professionals or try to plan your estate on your own while thinking only about the assets that create monthly statements, like mutual funds, stocks, and bank accounts.
However, in most estate planning situations, these illiquid assets represent less than half of a person’s portfolio. It could be a big mistake for any estate plan, particularly the one associated with a wealthy person to ignore other assets that are harder to sell.
This category of illiquid assets is equally important to consider in the estate planning process and can include any items that can be easily converted to cash. These can include collectibles, real estate property, livestock, timber and mineral rights, financial instruments without a ready market, options, hedge funds, stocks and non-public corporations, and ownership interests in a privately held business.
For many people who ignore these illiquid assets in the estate planning process, the most severe consequences are not felt until after you pass away. Every asset counts when it comes to estate planning and strategies to protect your loved ones.
If a sizable portion of the assets inside an estate are not liquid, they might have to be sold to raise the cash needed to pay for the debts or taxes of the estate. But it can be very challenging to sell some of these more complicated assets within the tight window of a reasonable time frame for estate administration, which is typically 9 months.
Sit down with your experienced and dedicated estate planning lawyer to discuss the options for planning ahead for illiquid assets.