A Will Isn't Enough Anymore: How to Keep Million-Dollar Collectibles From Breaking Your Estate Plan
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From fine wines to vintage guitars and Birkin bags, high-end collectibles have moved beyond the realm of the ultra-wealthy. As more investors fold million-dollar collectible assets into their portfolios, a new question emerges: What happens when your investment surges in value and traditional estate plans fall short of protecting it?
"Without specialized estate planning, these valuable assets can lead to millions in taxes, family disputes, and forced sales," Matthew F. Erskine, a trusts and estates attorney, wrote in a contribution to Forbes.
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Strategies for Estate Planning for Collectibles
Consider taking these steps so your family will know the value of your collection, understand what to do with it and avoid large tax bills.
Maintain a Detailed Inventory
Write descriptions, take photographs and note the condition of items in your collection. Include certificates of authenticity, a history of ownership, policies for insurance and instructions for care.
Seek Professional Appraisals
Have a professional appraiser provide the fair market value of your collection regularly, perhaps for your annual financial planning update.
Decide How to Distribute Your Collectibles
Choose from among these three options for distributing your collectibles: leaving them to your heirs, donating them to a charity or selling them while you're alive and distributing the proceeds.
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Choose the Right Executor or Trustee
Select a fiduciary with experience in valuable collections or with the means to hire a professional with collectibles experience.
Formalize Your Plans
During estate planning, include your wishes and a detailed inventory, valuation and distribution plan in your will and trusts.
Talk to Your Loved Ones
Take the time to sit and talk with family members about your collectibles so they know what's in your written plan and how it may impact them. They also need to understand what your collection means to you.
Wills are just one piece of a comprehensive estate plan, and they often are insufficient for addressing tax implications, complying with legal regulations or mitigating potential family feuds.
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