If you weren’t here tomorrow, could your family find your private investments?

Picture the person who picks this up after you. It might be your spouse, an adult child, a successor trustee or the executor named in your will. They may be dealing with your death, or with an illness that takes you out of the picture for six months.

The liquid side of your balance sheet will be manageable. There is a custodian, a monthly statement, an account number and someone to call. It isn’t pleasant work, but the path is clear.

The private side is different. It is often twenty or thirty fund interests and direct holdings, accumulated over a decade or more, held across a few trusts and LLCs. There is no single statement and no single phone number. Frequently, the only complete list of what you own exists in your head.

What the next person actually inherits

No list. The first job is to find out what exists. That usually means searching your email for capital call notices, going through tax returns for K-1s, and asking your CPA which partnerships they have seen. Anything that hasn’t issued a K-1 recently, or was held through an entity they don’t know about, can easily be missed.

Commitments that keep running. A fund doesn’t stop calling capital because an investor has died or become incapacitated. If you have unfunded commitments, notices will keep arriving on their normal schedule. Each one has a deadline. The person dealing with it has to work out which entity the notice relates to, whether the commitment is real, and who has authority to act.

Portals locked to you. Investor portals are usually registered to your email address, with two-factor authentication on your phone. Your family may have legal authority long before they have practical access.

Ownership that isn’t obvious. A position held by “the 2019 Trust” or “Holdings LLC” isn’t visible from your personal records. The next person needs to know which entity owns what, who signs for it, and who receives its tax documents.

Relationships that were personal. Many general partners know you, not your family. A call from a stranger saying “I think my father was invested in your third fund” is not a quick conversation, and it rarely produces documents quickly either.

Authority without information

Good estate planning gives the right people authority: a durable power of attorney, a successor trustee, an executor. It doesn’t give them information.

A successor trustee can have full legal power over a trust and still have no idea that the trust holds a commitment to a fund with a call due in three weeks. The documents that establish authority and the documents that describe the holdings are different things, usually kept in different places.

Why missed deadlines matter

Limited partnership agreements typically contain default provisions for investors who fail to fund a capital call. They vary by fund, and some are lenient in practice. But the remedies written into these agreements can be severe. They can include interest charges, suspended distributions, a forced sale of the interest, or forfeiture of part of it.

Most people have never read those clauses in their own agreements. It is worth knowing what yours say, and worth making sure whoever steps in knows where to find them.

What the estate process will ask for

If an estate needs to be administered, someone will have to produce a complete inventory of what was owned. For estates required to file a federal estate tax return, that return is generally due nine months after the date of death, although an extension is available.

The private holdings are usually the slowest part of that inventory to assemble. Your estate attorney and any appraiser will decide what valuation work is needed. A fund’s reported net asset value is a starting point for that conversation, not necessarily the figure that gets used. But nobody can start that conversation without first knowing the position exists, what it is, and who holds it.

What a usable record looks like

The fix isn’t complicated, but it does take work. The next person needs one document that answers a short set of questions for every private position:

• What is it? The legal name of the fund or company, the manager, and the vintage.
• Who owns it? The trust, LLC or individual that holds it, and who signs for that entity.
• What’s committed and what’s still callable? The original commitment, what has been paid in, and what remains outstanding.
• What’s it reported to be worth, and as of when? The latest figure from the manager, with its date.
• Who do you call? The GP or administrator contact, and whether there’s a portal.
• Where are the documents? The subscription agreement, the latest capital account statement, the latest K-1 and any side letter, filed where someone else can find them.
• What’s missing? Stale valuations, missing documents, or positions with no recent contact. It is better to know about these now than to discover them later.

That record is only useful if it is current. A list compiled five years ago and never updated can be worse than no list, because it gives false confidence.

Five questions worth asking this month

These aren’t recommendations; they are the questions your family will eventually ask, whether or not you have answered them.

1. If someone had to list every private investment you hold, where would they start?
2. Does your successor trustee or agent know which investor portals exist, and how they would get access?
3. Does your estate attorney have a current schedule of your private holdings, or only the entities that hold them?
4. If a capital call arrived while you were unavailable, who would recognize it, and who has authority to act on it?
5. When was the answer to question 1 last written down?

Where we fit

We build and maintain that record: one register of your private investments, entity by entity, with the documents behind it, refreshed quarterly or annually. If you choose, a defined summary goes to your advisor.

We don’t give estate planning, legal or tax advice. That work belongs with your attorney and CPA, and they will both find it easier with the record in hand. We don’t move money, sign anything, or verify notices; your designated signatories do. We just make sure the information exists, is current, and is somewhere the right people can find it.

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Franklin Fund Services is not a registered investment adviser, broker-dealer, law firm or accounting firm. This article is general information, not legal, tax or investment advice. Speak to your own advisors about your circumstances.