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21 January 2025

New Year, New Perspective | A Primer on Unique and Hard-to-Value Assets

The start of a new year is the perfect time to recalibrate and ensure alignment within your organization. It’s an opportunity to assess where you stand and map a clear path forward. In this spirit, let’s take a moment to dive into the world of unique assets, a crucial but often misunderstood asset class. Understanding these assets and their complexities can empower you to help your clients better manage these holdings with greater confidence and precision.

What Are Unique Assets?

Unique assets, often referred to as "unique and hard-to-value assets," are non-fungible holdings that lack an active marketplace. Either term distinguishes these assets from marketable assets such as stocks, bonds, ETFs, and cash. Unique assets encompass real estate, oil and gas interests, closely held business interests, notes and mortgages, and tangible personal property.

Breaking It Down: The “Unique” in Unique Assets

The term “unique” highlights the fundamental difference between these and fungible assets. For example:

  • Real Estate: Every property is defined by its specific metes and bounds, making it inherently unique.
  • Oil and Gas: Undeveloped oil and gas reserves are considered real estate until extraction occurs, at which point, they lose their unique characteristics and transform into the personal property of the oil and gas operator.
  • Tangible Personal Property: Collectibles like art, antiques, jewelry, classic cars, and sports memorabilia fall under this category. Each piece is singular in its characteristics and value.
  • Notes and Mortgages: These items represent distinct monetary interests tied to specific contracts, further reinforcing their uniqueness.
  • Closely Held Business Interests: A small business with stock held by a few people and the stock is restricted so to prohibit freely trading the stock on an open exchange.

The Challenge of Hard-to-Value Assets

Marketable assets come with readily available prices through trading platforms or exchange rates, making their valuation straightforward. Unique assets, however, lack an active marketplace, which makes determining their market value far more complex.

Market value is traditionally defined as the price a willing buyer and seller would agree upon, absent external pressures. This theoretical value can be elusive for unique assets, creating challenges for trustees. These challenges can include:

  • Assessing the basis when assets are transferred into or out of a trust
  • Calculating ad valorem taxes
  • Reporting income accurately

Addressing these valuation challenges requires expertise, diligence, and a tailored approach.

How SS&C Innovest Can Help

At SS&C Innovest, we specialize in managing unique asset classes for our clients. Whether it is needed for real estate, oil and gas, closely held business interests, or collectibles, our dedicated teams bring deep expertise and a nuanced understanding of each asset type. We’re equipped to navigate the complexities that unique assets present, helping you manage these holdings efficiently and confidently.

SS&C  Innovest’s forward-thinking technology solutions are the choice of many of the industry’s largest Trust Companies, Wealth Management firms, Retirement Platforms, and Philanthropic organizations.

To learn more about how SS&C Innovest can support your business needs, call (800) 727-0605 or email info@advent.com.