Specialty assets, such as private businesses, real estate and/or mineral asset holdings, are distinctive, complex and emotionally laden, and deserve extra care and consideration in your trust and estate planning.
Unique assets privately owned by you—private businesses, real estate and/or mineral asset holdings for example—may have a special place in your heart as well as your portfolio.
Think about that property you bought years ago—the oil, gas or other mineral assets that have been in your family for generations or the family business or private partnerships you have nurtured through good times and bad.
We refer to these as “specialty assets” because they are distinct from the more broadly held stocks, bonds and other financial assets in your portfolio. Their unique and complex nature requires specialized skill and attention to ensure they accomplish the wealth goals you have set for them.
These assets often require ongoing management, day-to-day administration, continuous monitoring, risk mitigation and capital improvements. Active, informed decision making drives their growth and protects their value. Such decision making relies on an intimate knowledge of the individual business or asset, as well as the developments (economic, regulatory, tax, environmental and more, at the macro, industry, regional and community levels) that can enhance or detract from the contributions of these assets to your wealth and that of your beneficiaries.
Specialty assets—distinctive, complex and emotionally laden—deserve extra care and consideration in your trust and estate planning.
What kind of plan do you have in place for your specialty assets?
Do you have the right successors to manage and protect the long-term value of your specialty assets—in line with your financial planning and wealth transfer objectives?
Perhaps you have been managing the family business and looking after these non-financial assets with great success for years. But who will assume those responsibilities if you choose to step back or are no longer at the helm? Does the next generation aspire to this responsibility; is it prepared? Are you confident there will be a smooth transition with minimal conflict among beneficiaries—or is there potential for disruptive family dynamics?
These assets often come with extraordinary challenges that last beyond any one generation. That’s why many owners of such unique assets provide for their management and transition of ownership through a trust administered by corporate fiduciaries.
Servicing specialty assets requires a highly specialized team
Specialty assets require a level of experience, knowledge and resources that no one individual trustee or executor can possess. You need a trusted corporate fiduciary and asset manager supported by a team of seasoned professionals that includes specialists with deep expertise. The right team is one positioned not merely to estimate and track the value of these assets, but also to help with hands-on management, structure a long-term plan, and work with you to protect and potentially enhance their value—in line with your goals and across generations.
The following case studies are drawn from the experiences of our own specialty assets teams, a dedicated part of the corporate trust and estate services we provide. Examples highlight different specialty assets, the challenges that accompanied them and what we did to help achieve our clients’ desired outcomes.
Real estate: Resolving a longstanding, complex issue
J.P. Morgan served as a co-executor for a multimillion-dollar estate with an existing trust that subsequently funded six continuing trusts for the benefit of family members, with J.P. Morgan as co-trustee. The estate contained significant real property assets, including more than 12 parcels of vacant land.
Challenge: One sizeable property had been contaminated by a gasoline spill prior to J.P. Morgan’s involvement, an issue which would impact the sale, transfer or retention of the property.
Resolution: Our Real Property Assets Management Team worked for more than two decades with a state Department of Environmental Protection (DEP) as well as consultants and contractors to remediate the environmental issues. Upon obtaining DEP clearance, the team marketed the property and, by addressing the potential buyer’s perception of possible residual risks with the contaminated property, sold the property at a premium in excess of the appraised value.
Mineral assets: Maintaining and enhancing value
A family with a ranching legacy dating back to the mid-19th century amassed a 400,000 acre estate that contained mineral interests. The family engaged J.P. Morgan’s Mineral Asset Management Team to manage and preserve these specialty assets.
Challenge: The family's wish was to maximize the value of these mineral interests while ensuring they were part of their legacy plan.
Resolution: Our Mineral Asset Management Team used its experience and market knowledge to evaluate trends and leverage the concentrated ownership of these mineral assets to increase negotiation capabilities. This resulted in favorable terms, and a windfall of lease bonus income and subsequent flows of royalty revenues. To this day, J.P. Morgan continues to manage this legacy, working closely with the co-trustee and beneficiaries to secure this wealth engine for future generations.
Private business interests: Educating the next generation
J.P. Morgan served as trustee of several trusts that owned a portion of a well-known vacation resort business based in the United States, an asset that had been transferred into the trusts by the company’s founder for the benefit of his children and grandchildren.
Challenge: When the grantor died, one of the second-generation siblings assumed management responsibility of the vacation resort business. It was important to maintain family harmony while helping to ensure the long-term success of the enterprise.
Resolution: Our Closely Held Asset Management Team helped educate the sibling who was not involved in the management of the business and also the next generation. The team regularly presented detailed performance updates and recommendations on the business to the beneficiaries. This knowledgeable, objective view and high level of transparency helped assure all beneficiaries that the business was being managed with utmost care and with their best interests in mind.
If you have specialty assets in your portfolio, talk to your J.P. Morgan team to learn more about our dedicated specialty asset management resources, and how we can help you achieve your trust and estate planning goals.