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For some estates, hard-to-value assets a material issue

A couple hypotheticals can serve to put the above blog title into quick perspective for our readers.

Say that an individual or couple in Texas or elsewhere comes to an estate administration attorney to discuss asset protection, legal tax avoidance and other matters centrally relevant to the passing of their estate to their heirs and loved ones. They have a house, a boat, cars, jewelry and various savings accounts.

Now imagine conversely that they don't have much of anything -- except for patent rights to an industrial process that hasn't panned out yet, or perhaps a singular set of collectors' items that no one has paid much attention to.

In the first instance, a professional well trained in valuing property might not have much of a problem accurately appraising the assets in play. They are common, there is a ready market for them, buyers are available, and well-established valuation processes exist.

In the second scenario, things can be a bit more difficult. A recent New York Times article mentions the famous author J.D. Salinger and mega-star Michael Jackson’s estates to raise the point that in some instances it is quite unclear what the value of an estate might be in the future as compared to what it is worth prior to or at the death of a person seeking estate planning advice. The estates of both Salinger and Jackson -- as well as those of Marilyn Monroe, James Dean, Elvis Presley and other icons -- are worth far more presently than they were when those people died.

It can be hard to value that earning potential following death. As the Times notes, though, “trying to divine such values, however difficult, is an important part of settling any estate and avoiding the ire of the IRS.”

The bottom line for effective estate planning is that all assets -- ranging from real property and business ownership to intellectual property rights and singular art or memorabilia collections -- be identified through consultation with a proven estate planning attorney and valued as accurately as possible through established processes.

Source: New York Times, "Putting an estate value on the assets unique to you," Paul Sullivan, Sept. 27, 2013

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