If you have a collection of coins, art, stamps or other fine items, those valuables need to be priority in case something should happen to you. Specifically addressing your collection in your estate plan will provide peace of mind and offer your personal representative direction.
The following steps should be taken into consideration and will be discussed during your consultation. They are helpful tips to prepare your collection for after your death.
Step One: Inventory
Do you have a current inventory of what you own? If not, the first step an attorney will offer as guidance is to catalog the collection, including:
- A list of items and their location;
- The date of acquisition;
- The purchase price;
- If applicable, the creator and the date the item was created;
- Gallery or dealer names, along with their contact information, and any paperwork that refers to the item, such as catalogs and bills of sale; and
- The current value.
The last step (the current value) may require an expert to evaluate the items. Some collections are so specialized that a local expert will not be available. You are the best source of information about your collection; the next best is someone familiar your collectibles, such as a dealer, a repair person, an appraiser or an academic. If you cannot identify an expert from any of your own collecting connections, your attorney may be able to use her referral sources to find one.
Step Two: Evaluate
Is the collection more valuable as a whole or as individual items? Do you have complete records to establish when you acquired each item, from whom and for how much? A single piece of paperwork can determine the provenance – and thus the value – of an item.
Are you a collector, investor or dealer of the types of items in your collection? The IRS will tax the sale or inheritance of collected items depending on the role played in acquiring the collection.
Is the item easily recognizable as valuable? Many people would recognize a painting by Edgar Degas is valuable but might not realize a 1923 Gibson F5 Mandolin – with a label signed by Lloyd Loar – is also very valuable.
Is your collection, or pieces from it, liquid? In other words, how easily could you (or your personal representative) sell the item? A highly sought-after item can easily be sold at auction or private sale – even if it is in poor condition – because of its rarity.
Are the items in the collection unique? Items that would catch the attention of other collectors and institutions hoping to acquire them would earn a premium because of their rarity. On the other hand, not all unique items are of sufficient interest to others to justify an auction.
Step Three: Managing the Collection
What style of collection do you have? Is it a mishmash of art glass or impressionist paintings, acquired mostly because you liked it? Or is it a well-curated, cohesive group of first-edition books or Tiffany glass that makes sense as a whole?
The inventory and evaluation process can highlight lesser-value items, duplicates and items that no longer fit. This is a good time for you to consider selling, gifting or donating some items from your collection to enhance the value of the remaining items or to make disposition easier.
Keep in mind that managing your collection will continue after your death, so it is important for you to choose a personal representative carefully. A close friend (while a wonderful person) may not have the expertise or time to properly store and dispose your antique typewriters, art glass or archtop guitars. In some circumstances, a private curator or expert in the field may be better equipped to manage a specialized collection.
Additionally, you should allocate funds in your estate plan to ensure that post-death management of your collection is done appropriately. For example, musical instruments need to be stored in a heat- and humidity-controlled space; stamps and books need to be kept dry; and vehicles require specialized transport. One way to fund this is to purchase a life insurance policy and designate the proceeds to pay expenses associated with the collection (curator/PR, appraisers, storage, conservation, auctioneers, etc.).
Finally, think about the cost and logistics of specific bequests. Does the Indianapolis Museum of Art have room to display the 500 Roman coins you want to donate? If the items will instead be put into storage or sold to fund the acquisition of other art, is that acceptable? If the designated recipient lives in another state or country, will it be difficult and costly to ship the item safely and legally? Shipping a set of first-edition Louisa May Alcott books to Minnesota would be relatively easy and inexpensive; shipping a set of antique ivory chess pieces to Wales might be both expensive and illegal.
The more effort you – as a client – put into cataloging, curating, and planning for the disposition of your collection, the more likely the collection will be treated according to your wishes.
This column was originally published in Indiana Lawyer here.
Melissa De Groff is a partner at KGR. Her practice focuses on representing individuals in estate planning and state administration proceedings.
A Tribute to Our Friend & Colleague, Syd Steele