Some of my earliest memories of my grandmother center around her barn, The Purple Onion. I found many treasures in that barn and loved to visit my grandmother just to explore its contents. My favorite part was when she would invite me into the barn and show me her beautiful collections. I remember exquisite glass that sparkled in the sunlight, simple toys that I didn’t see in the store, and furniture that gleamed from polish. My grandmother was a collector and sold her wares at flea markets. While I wasn’t involved, I’m certain my grandmother spent hours, days, and likely weeks curating the various collections held in The Purple Onion. I have no idea what happened to those treasures when she died, although I suspect that they went to my aunt and uncles. I hope that they knew what to do and were able to determine what was valuable. That’s often an issue for someone who inherits tangible personal property; no one has educated them on how to maintain or value a collection. These beneficiaries might only see a fraction of the true worth of the collection because they lack the skills necessary to determine, let alone obtain, top dollar for the collection.
Some articles have warned us that tangible personal property has less value than ever and that the next generation doesn’t want to deal with selling grandmother’s lot of jewelry. Others have reported the opposite and encourage an understanding of the value of tangible personal property. These sources provide a plan for maintaining collectibles and provide instructions for recipients of that property. The remainder of this blog will do the same.
Collections come in many forms such as jewelry, art, furniture, books, dolls, or baseball cards. Regardless of the type of collection, it’s important to inventory the items in the collection. While this seems like an obvious first step, you’d be surprised how many people skip it. It’s usually the collector who understands what pieces belong and how to determine their value. Yet that same collector has failed to list the items of the collection together, or worse yet, failed to keep the collection together. Perhaps the collector has sold, gifted, or loaned pieces over the years. The collector needs to understand that an estate inventory might establish a lower price for an item to keep potential taxes and fees for the estate to a minimum. For that reason, the inventory should include a list of all items, preferably with photographs and disclosure of location. The inventory should include the dates of creation or acquisition, including any bills of sale, licenses, assignments, or copyrights associated with the collection along with the names and contact information for any galleries housing the items as well as any auction or exhibit catalogs that depict the items. The collector should use a certified appraiser to value the collection and update the inventory regularly.
The second step involves aggregation. A collection may be more than tangible items. As noted above, it may include documents, catalogs, notes, letters, bills of sale, and associated paperwork. These items taken together help determine the provenance and value of each item making it vital to group them together. This helps streamline the collection and determine which assets have more value than the others. It may make sense to break the bigger collection into smaller groups based upon the market volatility or the intended recipient. Aggregating the items properly helps the individual who inherits the items receive top dollar for the collection if later sold. If there are items that are exceptionally valuable in the collection, it’s important to alert the beneficiaries to that value during life so that they know the importance of a particular piece and understand the importance of hiring a professional for valuation and sale purposes.
Management is the last step. Once the client cultivates the collection, then the client needs to determine whether the intended beneficiaries possess the skills required to manage the collection once the client dies. That means understanding the market fluctuations in the collection and deciding whether it makes sense to buy additional items for the collection or sell the collection. Multiple collections likely require several professionals involved with management. The individual managing the collection carries significant duties in managing it responsibly, limiting potential losses, and maintaining an unbiased view of the collection. Depending upon the terms of the estate planning documents, one or more fiduciaries may handle the collection before transferring it to the beneficiary and those fiduciaries need to understand the various steps necessary for proper management. The collection may need insurance to offset any additional administrative costs or taxes, storage and transport may require special skills or tools. The fiduciary may need to establish the provenance of the items. Finally, it’s important to consider intellectual property including copyrights for published images or music.
As this article demonstrates, Estate Planning includes planning for tangible personal property. Not every item belongs in a collection or has monetary value, but if an estate contains items that do, then the collector should take steps during life to help protect those items for the intended beneficiaries. If you or your client has a collection, reach out to a qualified Estate Planning attorney who can guide you in addressing the collection properly.
- What the Trump Administration Could Mean for Your Estate Plan - December 2, 2024
- Litigation…a Necessary Evil? - December 2, 2024
- Now is a Good Time for a Donor Advised Fund - December 2, 2024
