Schedule Of Assets: An Estate Planning Essential

Estate planning is not an exercise that most people consider enjoyable. However, it's incredibly important as your life and finances inevitably get more complicated over time.

When the time you pass away ultimately arrives, you want the process to be easy for your loved ones. A detailed and up-to-date Schedule of Assets helps make that possible.

What Is a Schedule of Assets?

In essence, a schedule of assets can be thought of like a faithful friend who's there to guide your family toward financial clarity after you're gone. Its purpose is to make them aware of your various holdings, investments, and most important possessions.

Whether it's the charming house you call home, the unicorn stocks you bet on, or even the rare signed books you stashed away, these important items should all be recorded in this central document.

What is actually included on an estate plan's schedule of assets? This detailed document should carefully list out each of your assets and where they're currently located. It can also list out when you acquired each asset, their approximate value, and any responsibilities tied to them.

You can also think of a schedule of assets as a financial roadmap. It's there to help your heirs navigate their way through your accumulated wealth and resources. Then they will ultimately close out that roadmap by selling or donating your assets. Or, they can start new paths forward for themselves by transferring your assets' titles to their own names.

A schedule of assets should go hand-in-hand with your death file, the file where you keep all your usernames and passwords to access many of your assets.

What To Include In a Schedule of Assets

Think of a schedule of assets as a snapshot of your finances at a particular point in time. It's more than just a list of what you own because it details your overall wealth's composition and value. Thus, it's essential to maintain accuracy and provide comprehensive information.

A schedule of assets document can encompass a wide range of items. Some important examples of what to include:

Real estate properties, structures, and other fixtures (condo, house, storage facility, etc.)
Life insurance policies (term life, whole life, etc.)
Personal property (electronics, appliances, equipment, furnishings, inventory, etc.)
Vehicles (cars, SUV, boats, campers, etc.)
Bank accounts (checking, high-yield savings, mortgages, loans, etc.)
Safes (safety deposit box, residential safes, data safe, private vaults, etc.)
Investments (stocks, bonds, ETFs, mutual funds, REITs, notes, etc.)
Retirement accounts (401ks, IRAs, SEP-IRAs, annuities, pensions, etc.)
Private equity investments (venture capital, fund of funds, leveraged buyout)
Business interests (sole proprietorship, LLC, LP, Corp, S-Corp, etc.)
Valuable collectibles (1st edition books, autographed merchandise, art, etc.)
Intellectual property rights (copyrights, trademarks, patents, royalties, etc.)
Intangible property (crypto, NFTs, email accounts, websites, software licenses, digital assets, etc.)
Contingent assets (legal claims, future gains, etc.)

Create A Supplementary Death File

If you hire an estate planning attorney to help with your estate plan, they may have specific suggestions on how to structure your schedule of assets.

If they want the document to be organized as a simple inventory, I highly recommend you create a supplementary death file. Your death file can be extensive with all the necessary supporting details.

I can't emphasize enough how difficult and stressful it is to settle someone's affairs when there is limited information readily available. I say this from my own personal experience.

Who Should Have A Schedule Of Assets?

A schedule of assets can be prepared for an individual, married couple, or an entity such as a trust. It serves as a comprehensive snapshot of the owners' entire financial portfolio. In addition, it should provide a clear overview of all assets, both tangible and intangible.

When done correctly, a schedule of assets should go beyond a simple inventory list. Having a complete catalog of your assets is helpful. However, a schedule of assets is most beneficial to your heirs if it includes comprehensive details.

For example, let's say you have multiple investment accounts. You should document the contact information for the bank or institution, clarify the account types (e.g. taxable or non-taxable, retirement vs general investment, 529 plan, etc), the account numbers, the approximate market values (ideally valued within the last year), acquisition dates, and any associated liabilities for each asset.

The document is referred to as a schedule of assets. But, it is also helpful to include information on your debts such as mortgage accounts, HELOCs, student loans, personal loans, and credit cards.

After all, your heirs will need to settle all of your debts after transferring ownership and/or selling your assets. They need your entire financial picture of both assets and liabilities.

Why Should You Update a Schedule of Assets?

Assets can change in value, ownership, and even type type over time due to various factors. Market fluctuations, acquisitions, sales, restructuring, and inheritance changes happen more than you may think.

Updating your schedule of assets regularly ensures that it remains aligned with your current financial situation. Here are six main reasons why it's important to keep it up to date.

Reflect Changes: Assets can change in value, ownership, or type over time due to various factors such as marriage, divorce, valuation changes, M&A, etc.
Accurate Financial Reporting: If you are preparing financial statements for accounting or reporting purposes, accurate and up-to-date asset information is crucial for compliance with accounting standards and regulations.
Estate Planning: Keeping your Schedule of Assets current is vital for effective estate planning. It helps ensure that your assets are distributed according to your wishes. It can also help you avoid and plan accordingly for estate taxes and help simplify the estate settlement process for your heirs.
Investment Strategy: If you have investment holdings, updating your Schedule of Assets allows you to assess the performance of your investments and adjust your investment strategy if needed.
Insurance Coverage: Regularly updates to your schedule of assets can help you evaluate whether your insurance coverage adequately protects your estate. Changes in asset values or acquisitions may require adjustments to your coverage.
Tax Planning: For tax purposes, having an updated Schedule of Assets helps in accurately reporting gains, losses, and deductions. It can also aid in planning for capital gains or estate taxes.

If you are unfamiliar with the implications of estate taxes and inheritance taxes, I recommend you speak with an estate attorney or hire a tax attorney. You can also check the IRS website for the latest tax forms and instructions.

How Often Should You Update Your Schedule Of Assets?

It's best practice to review and update your Schedule of Assets on an annual basis. Set a recurring yearly reminder to update it so you can capture important changes while they are still fresh in your memory.

All too often, people delay estate planning altogether or don't update documents for decades. The existing data can quickly become obsolete. And vital new information could be completely missing if you don't make an active effort to keep your schedule of assets updated. Don't let all your hard work go to waste! Speak to an estate planning lawyer while you're still well bodied and able.

Family Drama Can Ensue Without Proper Documentation

For those of you who watched the highly entertaining Max show Succession (spoiler alert), just think about the drama that occurred after Logan Roy's death.

What were the true intentions of Logan's handwritten markings on the letter found in his safe regarding his successor of Waystar? Even if your assets and family aren't anywhere near as complex or dramatic as the Roy family, don't leave things up to chance.

Always update your schedule of assets after significant financial transactions such as buying or selling property, acquiring new assets, paying off large debts, and marriage or divorce.

Remember that an accurate and up-to-date Schedule of Assets is a valuable tool for making informed financial decisions, ensuring compliance, and protecting your family's future. Regular updates help you stay in control of your legacy and financial journey.

For those of you who track your net worth through Empower or another web application, coming up with your schedule of assets should be easier to do. Your net worth tracker should already have as many of your assets as possible.

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