Real Estate: A Tricky Asset Class for Elders & Heirs

by admin on November 20, 2018

This article is featured in the Fall 2018 Newsletter. To view the full newsletter click here.

Real estate wealth has compounded well above other asset classes in Southern and Northern California, as well as other coastal cities and urban gateways across the country.

It is an economic engine that has allowed hard working families and businesses to buy and hold properties that have soared in value, across multiple generations.

Bottom line: Real estate has created a tremendous amount of prosperity. But because much of it is closely held within families, things can get complicated when it’s time for those legacy assets to transfer from elders to their heirs.

“With these legacy portfolios come unique challenges in transitioning to future owners and risk managers,” said Douglas Wilson, who cited the following complexities:

Unlike stocks and bonds, real estate is illiquid, complicated to manage, and not easily allocated among heirs.

There’s also an emotional component. When fortunes are made in real estate, owners often become psychologically attachedto their specific assets. Theseunique emotional issues make the wealth transition process evenmore difficult for wealth creators, their heirs, and advisors to them.

The transition becomes even more complex when you add in family dynamics: real estate skills – or lack thereof – become acute issues in the process.

In order to help legacy families with wealth transition decision- making and implementation, we follow a four-step process.

This begins with an indepth analysis and valuation of the assets to be transferred. Followed by a meeting with the members to fully understand the aspirations and concerns of all stakeholders, an asset transition and ongoing business plan is established. The last step is the implementation and oversight of the plan to ensure value remains for the stakeholders.

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