Lots of people are collectors. Whether great or small, collectibles enable people to express their passions and surround themselves with the things they find pleasing. A lot of those collections end up having a significant monetary value in addition to their aesthetic ones.
What do you do, however, with your collectibles when you’re making out your estate plans? Whether you have an array of elegant watercolors or a cache of vintage comic books, a valuable collection often presents problems when it comes time to draft a will.
Here are three key steps that will make it easier:
1. Recognize your collectibles
Even if you only have one of something, you need to keep it in mind when you’re making your plans if it has significant material worth. Some common items that you might want to think about include:
- Art, including paintings, statues
- Jewelry, especially signed pieces
- Vintage cars or motorcycles
- Stamp and coin collections
- First editions of books
- Signed sports memorabilia
- Antique furniture and toys
- Handmade items, including Amish quilts and Native American pottery
Some of these things may have been in your family so long that you’ve never considered their actual worth (outside of the sentimental one). For example, the Amish quilt that’s decorated your bedroom wall for years could be worth thousands depending on its pattern and workmanship.
2. Get appraisals
You can’t really divide up your assets among your heirs or decide how to distribute your collectibles unless you know what they’re worth. If you aren’t sure, have an appraisal done.
You can get jewelry, coins, stamps and antiques quickly evaluated by dealers and auction houses. Look for someone who specifically knows how to value whatever type of item or items you need appraised to get an accurate valuation.
3. Consider tax implications
Taxes on inherited collectibles are the major reason that so many are gifted to charity instead of the deceased donor’s direct heirs.
To avoid putting your heirs in the position of having to sell whatever collectible items you left them to pay the taxes, talk the issue over with your estate planner. There are often ways to balance things out to reduce the tax burden — or at least cover the expense.
Once you have these three key factors in mind, it will be much easier to distribute your assets fairly to your heirs through proper estate planning.
Source: wtop.com, “How to include valuable art and collectibles in your estate plan,” Dawn Doebler, May 30, 2018