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How to Protect Your Assets Now to Cover Your Ass(ets) for Later

You’re at Risk if You’re Not Recording Your Personal Assets

Your valuables are your assets—think of them as an investment and know how to protect your assets from disaster and regular wear and tear. From maintaining farmland to purchasing real estate investment properties to owning jewelry, wine and fine art, having tangible assets can be more than a hobby. It may also be a great way to diversify your portfolio in case of economic hardships.

It’s not enough to hold ownership over your investments. If you want to protect your assets against financial loss, recording your assets is paramount. Record and insure your valuables to hedge against headaches down the road in the event of physical loss, theft or destruction.

Protect What You Love (Or, at Least What You Paid for)

Tangible assets are the concrete things you can see and touch. They can range from land and vehicles to cash and collectible items. Some of these assets will be more liquid (i.e., easily convertible to cash) than others, which is an important thing to consider when recording your assets. What can be easily sold in a year, and what could take longer to convert to cash?

(By the way, there are also methods for recording your assets that are intangible, too. These items have value that can’t necessarily be seen, such as a secret recipe or business plans. Think of these items as intellectual property that can contribute towards your wealth, which, if stolen, could give others some sort of advantage.)

If your tangible assets are able to be stored, like jewelry or art, you’ll have to house them in a manner that keeps them in tip-top shape while they accrue equity.

How to Protect Your Assets: From Insurance to Maintenance

Here are some steps to keep in mind when recording your assets, and how to protect personal assets once they’ve been valued:

1. If It has Value to You Now, Insure It Now

This may seem like a given for such assets as your home or other real estate investments, but remember to also insure things like precious metals and jewelry, too. Your homeowner’s policy will only cover up to a certain amount, so if you have more expensive pieces, you’ll have to add an endorsement to your policy specifically for those items.

2. Leave a Paper Trail: Record Your Assets with Documentation

The documentation process itself might include taking photos or videos of your items to record the state they were in at a certain point in time. Then, the question comes in of how exactly to store these documents. You can choose to store them either in a safe deposit box at a bank, or store them at home.

Better Homes & Gardens mentions that you should keep a list of what’s inside your safe deposit box, and if you decide to store documentation at home, to invest in a fireproof—and even waterproof—storage option. Consider the perils that come with theft, the magazine suggests, and think about opting for a wall or floor safe, or a safe bolted down tight.

3. Provide Evidence of Ownership and Get an Appraisal

In the case of your unlikely and untimely death, you’ll want to list out your assets, “with a detailed description of each item and its fair market value,” according to LegalZoom. This includes listing intangible assets as well as your valuables and collections that are special to you, such as comic books, heirlooms and so on.

This process will require that you have your collections formally appraised. This is good practice in general, as having items appraised regularly keeps counterfeiting at bay.

4. Store Your Assets with Care

It’s common sense that once you put your money toward any tangible asset, you’re going to take good care of those items. You’ll monitor or cultivate the land you own; or keep up with repairs on the homes, buildings or other structures you’ve invested in; or protect your antiques in climate-controlled areas. But for things like art, gold, other precious metals, gems, coins and jewelry, the method for which to store those items is a bit less clear.

As for gold, storing it in a safe at home is your best option, especially if your home insurance covers a loss. The alternative—using a bank safe deposit box—can actually have some overlooked consequences: “The bank doesn’t insure precious metals that are stored in a safe deposit box. That’s up to you,” says the U.S. Money Reserve. “Purchasing insurance on your own can be costly, and that could minimize the financial strength of these assets. Plus, it can be hard to find an insurer willing to cover precious metals that are being kept at a bank. Oh, and don’t forget the expense of renting the safe deposit box.”

When it comes to fine wine, the process can be trickier than simply finding a location; it’s about temperature, too. Storing between 45 and 65 degrees is best, but don’t forget the importance of humidity. According to Cellaraiders,  “Without it, your corks could dry out, and air will get into the bottle, ruining your wine. On the other hand, you don’t want to store your wine in an extremely damp location, as it can promote mold.” Ideally, your wine should be stored at 70% humidity, but if that’s not possible, consider a professional and insured wine storage facility.

Covering Your Ass(ets)

For more information on how to protect your tangible assets, do your due diligence and talk to your financial advisor on what additional steps you can take to help them appreciate in value.

Remember: you can always prevent, but you can never undo. If you put money into a tangible investment, ensure you realize a return one way or another. Your investments and your peace of mind are on the line, and it’s better to be safe than sorry. Learn how to protect your assets while they are in top condition and before it’s too late.

[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: When, Who & Why to Value Your Assets, How to Value Your Assets and Valuing Real Estate Assets. This is an updated version of an article originally published on December 29, 2017.]

©All Rights Reserved. May, 2020.  DailyDAC™, LLC d/b/a/ Financial Poise™

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