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Prioritizing asset liquidation and management

Estate planning in Florida should include regular evaluation of assets to determine which should be held and which should be liquidated. It may be surprising, but some assets are not worth holding and trying to preserve for children and grandchildren while others should be held as long as possible. In some cases, value for the heir is much less than for the benefactor, making it important to rank both good and bad assets during estate planning.

One of the worst asset categories is depreciated securities. These will carry less value for an heir than for a benefactor who liquidates them at a loss. This is due to the fact that a capital loss deduction can be claimed. Such a deduction can be used to counter capital gains plus and additional $3,000 of income. Additionally, losses that aren't offset can be carried on to future tax returns. Cash and bonds are also considered less valuable as assets to keep in one's estate.

Assets to keep include depleted partnerships, collectibles, stocks that have appreciated greatly, and Roth IRA accounts. These may provide greater value to an heir than if sold or used by the owner. Tax implications can be an important factor as in the case of collectibles and Roth IRAs. However, taxation issues can be difficult to understand with some assets, making it helpful to work with an estate planning professional who can explain these issues clearly.

An estate planning lawyer may include a financial adviser in the planning process to assist with an evaluation of various assets and to provide a thorough explanation of the benefits of keeping or liquidating different holdings. In addition to creating a plan for asset distribution after a client's death, an estate planning lawyer and financial adviser may be able to help in creating a plan for using those assets for personal financial needs during one's latter years.

Source: Forbes, "Estate Planning: A Ranking of Good Assets and Bad Assets", William Baldwin, August 25, 2014

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