The importance of creating an asset log for effective estate planning
Arrangements may be in place to secure the financial future of those around you following your death – so take the time now to think about your executors, and whether they will be able to account for all of your assets once you have died.
An asset log is a detailed inventory of all the assets owned by an individual. By way of example, an asset log could include details of a house or other property, investments, and online bank accounts. Typically, the asset log would include a description of the asset and any reference numbers (e.g. for an investment portfolio or a bank account).
Here are some key benefits of creating an asset log:
Simplifies the role of your executors.
The executors of your Will have the responsibility of managing and distributing your estate after you have died according to your wishes. A detailed asset log simplifies this task significantly. It provides clear guidance on which assets exist, what account numbers or references are attributed to those assets, and where those assets are located, reducing the likelihood of errors and omissions in the process. Further, for the purposes of an application for Grant of Probate, and for the purposes of submitting Inheritance Tax accounts to HM Revenue and Customs, it is crucial to have an accurate and complete valuation of your estate. An asset log facilitates this by providing detailed information on each asset, making the role of your executors more efficient and less stressful.
Ensures fair distribution.
An asset log kept with a copy of your Will helps ensure that all beneficiaries as directed in your Will receive their intended inheritances. By listing all assets and their values, you provide transparency and clarity, which can help prevent disputes among beneficiaries.
Updates and changes in assets.
Assets are susceptible to change over time. An asset log allows you to keep a running update of what you own, in conjunction with up-to-date valuations. Whenever you acquire new assets or dispose of existing ones, you can update your asset log accordingly. This ongoing documentation prompts you to consider your current financial situation.
Aids in financial planning
Beyond its utility in estate planning, an asset log can also be a valuable tool for your own financial planning. Provided that it has been updated routinely, an asset log gives you a clear picture of your net worth and can help in making informed decisions about investments, retirement planning, and other financial matters.
Protection against loss and fraud.
An asset log kept with a copy of your Will can protect your estate against loss and fraud. By documenting all assets, you reduce the risk of assets being forgotten, lost, or fraudulently claimed by others.
Facilitates digital asset management.
In today's digital age, many people have significant digital assets, such as online bank accounts, cryptocurrency, digital files, and social media accounts. An asset log can include details on how to access these digital assets, ensuring they are not lost or inaccessible after your death. This is particularly important as accessing digital assets without proper authorisation can lead to criminal liability under the Computer Misuse Act 1990.
Furthermore, distinguishing between electronic data and the hardware on which it is stored is essential. For instance, data files and software programs are not considered 'personal chattels' (personal possessions) under the updated definition in the Inheritance and Trustees' Powers Act 2014. This distinction must be clearly reflected in the asset log to avoid any confusion during the administration of the estate.
*Please note there may be restrictions on storage of an asset log by professionals or companies if the asset log contains information relating to digital currencies and assets.
Provides peace of mind.
Perhaps most importantly, maintaining an asset log, and routinely reviewing your Will, provides peace of mind. Knowing that your affairs are in order and that your loved ones will be able to easily navigate your estate can relieve a significant amount of stress.
Separate Letter of Wishes relating to personal belongings
Separately, although there is some cross-over, with an asset log, you may choose to put in place a Letter of Wishes to deal with your personal chattels. Typically, a Letter of Wishes of this nature will sit alongside your Will. For example, you may have a collection of artworks, some jewellery, items of technology (a TV or games console perhaps), furniture or sentimental trinkets that you would like to ensure pass to specific beneficiaries. These are all examples of tangible assets and can be included in an asset log and/or Letter of Wishes.
Should you like to speak to one of our expert advisers in our national Lifetime and Estate Planning Team about your personal Estate Planning arrangement, please do contact us.
Co-authored by Laura Colville, Senior Associate Solicitor and Thomas Couch, Solicitor in our Chichester Estate Planning Team.
