Most people who first consider estate planning think that the process involves nothing more than figuring out how to divide one's assets upon their death. While this is true to a certain extent at a very basic level, the truth of the matter is that estate planning is much more involved. In fact, even the process of creating an asset distribution strategy can be much more challenging than anticipated.
Dividing liquid assets is easy enough. After all, items like cash, certain bank accounts and bonds can divided equally amongst heirs without as much effort. Difficulties often arise, though, when specific pieces of property, such as heirlooms, come into question. These assets are often referred to as hard assets.
One difficulty in distributing a hard asset is determining its value. This is why it is important to obtain a recent appraisal of the property by an individual who is qualified to provide that appraisal. Once the value of the item is known, an individual can better determine how best to address it in an estate plan.
He or she may choose to leave the item to one individual and then take the value of that item into account when distributing other assets, or the item can be left to multiple people with the option for one of them to buy the others out. Another common resolution is to sell the asset and simply distribute the cash as desired.
Dealing with hard assets is just one of the many challenging tasks that must be undertaken when engaging in estate planning. However, by being diligent and thorough, an individual can ensure that his or her estate plan is legally sound. This, in turn, can lead to distribution of an estate in accordance with one's wishes, which is the ultimate goal of estate planning.