subject: Asset Valuation Is Crucial To Planning Your Estate [print this page] state planning is an excellent way to protect your heirs from disagreements after you've passed away or problems with probate. One of the many things you'll need to do before starting the process planning is arranging for an asset valuation of any equipment you own, including airplanes, boats, fixtures and equipment and your business. There are several reasons why you want to have recent appraisals done on your business and equipment assets, outlined below.
Mnimizing Family Squabbles
Dividing up your estate equally can be tricky, particularly if you own a business or a variety of types of equipment. If you want to divide your property between multiple heirs, you may need a recent appraisal to determine how much everything is worth so that none of your heirs will feel short-changed. If you leave some heavy equipment to one son but leave cash to another, it will be helpful to know the fair market value of the equipment so that you can give the heir receiving cash an equitable amount. You don't want your children to argue endlessly about the fact that one or more of them got less real value from what you beqeathed to them.
Estate Taxes: Asset Valuation Helps You Plan Ahead
Inheritance taxes can quickly gobble up a third or more of your estate when you pass away, particularly if you own your own business. One way to minimize the tax burden on your heirs is to set aside a particular amount of money to be used to pay any taxes before the remainder is divided up to those you've left behind. An asset valuation will help you and your attorney determine how much of your cash or investments should be earmarked to pay the inheritance taxes on your business and equipment. If you plan to give a portion of your property to your heirs as gifts before you pass away, you could still get slammed with a gift tax if you give them anything above a certain cash value determined by the IRS. Talking to a CPA can help you determine how much you can give and how often without getting hit with a sizeable tax burden. In order for a CPA to do this, he'll need a current appraisal for anything, including your business, that you want to give away.
Creating A Living Trust
Living Trusts can be established for a number of reasons, but one of the most popular is so that individuals can help their heirs minimize the impact of inheritance taxes when the individuals pass away. If your assets have been set aside to fund a living trust, they don't have to go through probate court when you pass away. Instead, everything will go directly to the heirs mentioned in the trust agreement. An asset valuation can determine the value of each item in the trust, which will be needed for accounting purposes by your heirs. But because your estate won't be going through probate court, their privacy will be protected from scrutiny. If it goes through probate, it will become public record, where anyone can review your heirs' inheritance, including a complete accounting of every dollar and piece of property. A living trust keeps your property and any inheritance private. Contrast this with a Last Will and Testament that's been admitted to probate - it becomes a public court record that anyone can read.
A current asset valuation of your business and equipment is obviously central to setting up a living trust, planning your estate or even gifting your children with all or part of your business. If you haven't had one done recently, an asset valuation should be scheduled before you meet with your attorney so that they have all the information they need to structure your estate or trust in the best way possible for everyone.
