As we enter the last few months of 2020, we continue to be reminded each day how circumstances can change on a dime, and last longer than originally thought. We are also realizing the importance of taking stock of our lives, home inventory and figuring out how to best position ourselves moving forward. When it comes to wealth management, this includes becoming aware of our physical assets to see how they figure into our overall financial picture. Here are some reasons why taking a thorough inventory of your residence(s) is so critical, and some way in which you can do so.
The sale of a residence. Anyone who has moved will tell you what a chaotic experience it can be. No matter how professional or conscientious the moving company is, or how closely you or your staff oversee the process, it seems something always goes missing or gets damaged. Nothing will ease the pain of losing a treasured item, but if you know exactly what you have and how much it is worth, you will at least be compensated appropriately without a long, drawn-out battle with your insurance company. A note on that: there are certain possessions, art collections, for example, that you will want to insure separately, as some boilerplate homeowner’s policies do not provide adequate coverage.
Acts of God (and man). There are also unexpected events that result in the destruction or loss of physical assets – just ask anyone who has endured one of the recent hurricanes in Louisiana or the fires in California and had to leave their homes with little more than a suitcase. Similarly, if a theft occurs, you or your property management staff will be much more likely to notice an item is missing and report it to the appropriate parties.
Liquidity. Anyone, regardless of their financial circumstances, can find themselves in the position of needing to raise cash fast. While this often has a negative connotation, that is not necessarily the case; for example, you may hear of an excellent investment and have to jump on it immediately. This is one of those situations where real estate, while a great asset to have, is not helpful, as it takes too long to sell and the market may not be in your favor. You therefore want to be aware of other assets for which you can get a good price, and fast.
Wealth management/Estate planning. As mentioned above, your physical assets are an important part of your complete portfolio; therefore, knowing what you have and what it’s worth is critical to informed financial planning, not only for the present health of your estate, but so you can pass wealth it to your heirs or charities you’re passionate about.
There are a number of ways to get started with your home inventory, beginning with the most obvious: going from room to room and taking stock of everything. Or, on that rare lazy day, you can venture into your basement or attic and begin sifting through bins and boxes. (You might even find this fun, at least until that moment when the trip down memory lane turns to a complete feeling of overwhelm.) The key is to carefully document information about each item – including its full description and current condition – to later be recorded on an Excel sheet, or preferably, an all-in-on app. Be sure to take pictures from several angles, as these can also be uploaded into an app and shared with trusted partners such as financial planner and appraisers. If you are not present in the home or DIY projects are just not your thing, there are companies who will work with you, your staff, or independently to inventory assets. And as they can either come to your home or work virtually, there are no worries about distancing. No matter how short you are on time, or how many residences you have, there is no excuse to put this off any longer. Taking stewardship of your wealth truly begins at home, and it begins now.