If you own assets, such as real estate, heirlooms, art or other collections, you have some unique estate planning considerations. There are a few different ways to pass on these illiquid assets, and you’ll want to think carefully about your personal goals and the people who will receive these assets. 
In most cases, the best choice is to allow an heir to directly receive this asset. This is because these assets receive what is known as a step up in cost basis, which helps to reduce the capital gains tax burden, even if the person who receives it decides to sell it.
You can also place the asset into a family partnership trust or LLC and formalize the transfer of ownership in a tax-efficient manner while also reducing any future estate taxes. If you’re concerned that intended heirs don’t understand or appreciate the asset enough to sell it for a fair price, you can also choose to sell it yourself during your lifetime, pay the associated taxes and then gift the cash to those heirs.
It can be very difficult to determine an estate planning strategy for illiquid assets, as these may include emotions and different considerations for various family members who have their own opinions about how to handle that asset. It’s good to work with neutral third party, such as a qualified estate planning lawyer to assist you with that process, and to verify that you’ve considered all of the pros and cons of each strategy to ultimately arrive at something that makes the most sense for you.
A Pasadena estate planning attorney can help you craft a comprehensive and personalized estate plan.
