When you begin estate planning, one of the first tasks you must accomplish is to value the assets in your future estate. While this may be easy with some assets, it could be very tricky with others. What do you need to know about valuing both the tangible and intangible assets in your estate? Here are a few answers to get you started.

What Are Tangible and Intangible Assets?

Before you can properly account for them in your estate plan, you must first understand what constitutes a tangible or intangible asset. Tangible assets, in simple terms, are those assets you can touch and hold. Your primary home, your vehicles, and your grandmother's jewelry collection are all tangible assets. These are located in one place and are generally under your physical control.

Intangible assets cannot be touched or held. They often consist of only legal rights to something. One common example is a brokerage account. This account is filled with stocks and bonds that exist only virtually. You generally can't go to the brokerage company and request physical assets. Other examples include royalties and copyrights, the goodwill of business brands, and uncompleted contracts.

How Do You Value Tangible Assets?

Valuing a tangible asset is usually done through researching the market for selling the asset. To value your primary or vacation home, for example, you may work with a real estate agent to determine what you could sell it for right now. A vehicle might be valued either by researching its book value or its value if sold on the market today.

How Do You Value Intangible Assets?

Intangible assets could be easy to value or they may be difficult to value. Bank or brokerage accounts, retirement funds, and many insurance policies provide a clear statement of their value as of the current date. All you may need to do is print out the statement and you know what your heir will receive.

Other assets, though, may need research and estimation. Royalties, copyrights, patents, and pensions hold much of their value in the future income expected from the asset rather than its actual value at the moment. And interest in your business or partnership could either be valued in terms of the physical assets of the business or in the potential income or growth expected in the future.

Most people who hold income-producing intangible assets use professional valuators to do the research.

Why Is Good Valuation So Important?

Because a lot may be involved in properly valuing various types of assets, you may wonder why go to all the extra work. First, accurate valuation of both intangible and tangible assets allows you to fairly or equally distribute the value of your estate. If you leave your home to one child but your business stake to the other, only an accurate valuation of both will tell you (and them) if this was an equal distribution.

As you work to find out the true value of your assets and what will be needed for future heirs to access that value, you can also make better decisions and involve heirs. Knowing whether your pension will pay out a lot or a little to your beneficiary will help both you and them make an appropriate plan for their own financial care later on. It eliminates the need to guess at things.

Where Can You Get Help?

Nearly everyone has some type of both tangible and intangible assets to include in their estate. But placing a price tag on these can be very different depending on the item. The best place to begin is to learn more about how to manage your particular assets in your personal estate plan.

Bliss & Skeen CPAs can help. We offer guidance throughout the estate planning process, from identifying assets and valuing them to assisting heirs with their needs. Call today to make an appointment.