Estate Planning for Collectors

Collectors can spend lifetimes building and expanding their collections, and though these collections can end up costing large sums of money, the real value of the collection tends to be the emotional value attached to it. Creating a detailed estate plan for a collection can help a collector determine what happens to her collectables following her death and can help give her a piece of mind when it comes to her collection’s next owner.

One of the first steps when it comes to preparing an estate plan for a collection is to get the collection appraised. The next step is to determine whether the collection should be kept together, given to numerous beneficiaries, donated to a museum, or sold to third parties to increase monetary inheritances. While many collectors hope to keep the collection in their families, others realize that their hobbies and tastes may not be those of their family.

For collections worth large amounts of money, collectors can plan ahead to help reduce estate tax by using the annual gift exclusion to slowly gift away portions of the collection during their lifetime. Collectors can put more significant pieces in trust for their heirs to help protect these pieces from creditors. Both of these strategies require an appraisal of the collection, and collectors should consider contacting the IRS’s art advisory panel to receive a value of the collection that will be binding.

For more information on estate planning for collectors, see Paul Sullivan, Making Plans for Prized Collections, Heartstrings Included, The New York Times, Feb. 24, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.