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Preventing Your Treasures from Turning into a Loved One's Headache

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We all have read about or seen someone on Antiques Roadshow who had a family's collection of coins or garage sale find that turned out to be worth far more than expected - rare, but it happens. What do you do with these treasures when it's time to write your will or trust?

First, what is a "Collectible"?

According to Investopedia, "A collectible refers to an item worth far more than it was initially sold for because of its rarity and/or popularity."

People spend years building a collection they are passionate about, from coins, stamps, and comic books to baseball cards, jewelry, art, wine, and even cars. Beyond their monetary value, these collections can bring joy in the creation - and anticipation for their future worth.

Do you possess collectibles in your estate? Collectibles represent a significant investment category. The trust officers at Crews Bank & Trust’s Trust and Wealth Management division advise their clients to plan for how they want these collections managed in their estate, as transferring them can be more complex and time-consuming than expected.

Gifting a collection

For items of significant value or if you're unsure of their worth, it's essential to have your collectibles appraised and adequately insured. Additionally, it's crucial to incorporate them into your will, trust, or a separate written memorandum or tangible personal property list (if referenced in your will) so the intended recipient receives your gift or gifts. Part of the planning process for gifting a collection is to determine if the recipient is interested or able to accept the gift as well as deciding what happens if the individual predeceases you.

For valuable collections, donating to a museum, college or charity sounds like a win-win but these institutions may not find the collection easy to accept if they lack space to display. They would then be required to store the collection properly and safely, which in the end costs the institution money and defeats the intent of the gift.

Selling a collection

A less complicated way to manage a collection would be for you to sell it yourself, keeping in mind that this type of collectible may be considered an asset by the IRS, which incurs a higher capital gains tax rate.

Or you could leave directions for your trustee to sell it. However, be aware that may take longer than expected, as it may take some time to find a buyer with similar collecting interests. If you leave instructions in your will for the collection to be sold, you should ensure the trustee has the time and knowledge to sell it properly, if you are hoping for it to be sold for its true value vs. a quick sale to the first interested buyer. A best practice in these cases is to provide an up-to-date inventory of the collection, along with the most recent appraisal and the name of a reputable dealer to work with to help with the sale, to ensure the best return on the investment.

Bequeathing your collection

If you plan on bequeathing your collection to a family member or a friend, be sure they are interested in the collection, able to maintain it, as in antique cars, or store it, as in a wine collection. Maintenance and storage could provide to be more of a burden to the recipient than the gift is worth to them.

To preserve harmony, especially when family is involved, it’s important to determine if there is more than one person who may be interested in the collection and decide ahead of time how it might be shared. As we know, there is often family tension regarding inheritance, so it is especially important that items that have a named beneficiary be documented. It’s also important to share the most recent signed and dated copy of any written memorandum or revised will or trust documents with your trust officer for safekeeping.

Let Crews Bank & Trust help you pass on your treasures

Enjoy your collectibles and when the time comes to part with them, proper planning will ensure they are enjoyed by new generations to come. Our trust officers would be happy to review your documents with you to ensure your treasures are protected and passed on according to your wishes.

 

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