Who are you and what does your business do?
I’ve been a business appraiser for over 30 years. Our core clientele consists of trust companies, family offices, and trust departments of banks. More recently, in response to client requests, I’ve become something of an expert on managing “unique assets”.
What is a unique asset? What are the types?
I often describe unique assets as “investments you find on Main Street, not Wall Street”. They include interests in closely-held businesses, traditional real estate, specialty real estate (farms, ranches, orchards, timber), life insurance, rights to minerals, oil and gas, collectibles (artwork, car collections), and intellectual property.
How does your business help trustees who hold unique assets in trust?
It takes way more effort to handle unique assets properly than to handle traditional investments like stocks, bonds and mutual funds. But most trustees have little or no idea how to do it. Often they’ve come into their current practices by default. The result is (a) they are uncertain how to provide the services unique asset owners need, and (b) they aren’t being compensated for the work and risk they’ve assumed. Our consulting group, Unique Asset Partners LLC, helps trustees get their act together.
You have been in this business for over three decades. How has the landscape changed for trusts as owners of unique assets?
It seems like people are more aware today than they were 30 years ago that unique assets are an important investment class, not just a nuisance. So much of our society’s wealth springs from unique assets. There is an IRS study I highlight that suggests at least 1/3 of the investments owned by millionaires are unique assets. That surprises a lot of people.
What advice do you have for trustees of trusts that own unique assets?
Don’t ignore them. Unique assets are super important to their owners, so they should be important to anyone serving those owners. The good news is, it doesn’t take much to become a great unique asset manager. It is not easy, but there is a finite list of items trustees need to address – 28 items, in fact.
This month we're looking at the issue of decision-making and succession for family vacation properties. Tell us about your experience with this kind of property.
Wow. After 30 years in this business, I can say categorically that vacation properties cause more tears than any other type of unique asset.
Why is that?
In my experience, the root cause is often the powers-that-be fail to set ground rules and communicate those ground rules to family members. That leads to a lot of unmet expectations and many tears.
Why is usage of the property a big deal when the family members have access to other places to go for vacation and money to spend?
You know the answer to that. The cabin where you spent summers growing up – where you had your first kiss, sneaked your first cigarette – pack so much emotional meaning that no real estate appraiser can appreciate. This unique asset is not just bricks and sticks; it is memories.
How do in-laws figure in these situations?
What I’ve observed is that even when in-laws have benign motives, in-laws tend to be less aware than blood relatives of the emotions invested in the property. They tend to look at things rationally, yet emotions play a huge role.
How do you suggest disputes be resolved?
Bite the bullet. The sooner the owners get together, develop a set of ground rules and promulgate them, the better. People may be unnerved in the short term, but if the rules are good, people get used to them and endless future squabbles can be avoided.
For further information on unique assets check out: