From Hobby to Investment: How to Plan for Collectibles in Your Estate
- Avoid a Fire Sale: Don’t Let Taxes Catch Your Heirs by Surprise
- Talk with a estate planning professional to determine the best method of to reduce the tax burden of your collection, whether it be gifting during your life or at death.
- Put It on Paper: What Do You Own, Where Is It, and How Much Is It Worth?
- It would be prudent to group authentication paperwork, records of purchases, and any information regarding the history of the item to establish its provenance (chain of ownership) altogether with your estate planning documents.
- Have a Backup Plan: Who Will Protect Your Collection if You’re Not Able?
- If you become incapacitated or otherwise unable to manage your own affairs, a power of attorney allows a designated person to act as your agent, ensuring your collection is handled according to your wishes
- Share Your Passion: Does Your Family Know Why You Collect?
- Do not just pass along the collection itself – explain to your family why it is so important to you, why it is your passion.
- Preserve Your Collection: Find an Executor Who Knows How to Maintain It
- Having an executor that understands the particulars of your collection is extremely important, especially since they may need to find experienced appraisers for the items.
- Reduce Taxes: Leave Your Treasures in the Hands of a Deserving Charity
- When loved ones simply do not share your enthusiasm for a collection, or it becomes impossible to divide it equitably, a better choice may be donating it to charity and leaving other assets to your heirs.
- The Takeaway: To Preserve the Value of Your Collection, Think Ahead
See From Hobby to Investment: How to Plan for Collectibles in Your Estate, Fiduciary Trust, September 4, 2019.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.