Most local families have traditional assets that need to be dealt with as part of their New York estate planning efforts: a house, car, stocks, bonds, retirement accounts, and the like. However, some families have very different (but valuable) assets that must be considered vital parts of their estate. For example, collections often present unique estate planning challenges. Should the collection be split up and sold? Is there another in the family who appreciates the collection as much as the original owner? How much is the collection worth? What ramifications might it have on taxes and long-term healthcare support? All of these issues must be considered when thinking about elder law estate planning.
Popular collections or antiques can be quite valuable with significant consequences on financial planning efforts. For example, according to Advisor One, a 3,000 bottle wine collection is set to be auctioned later this month in New York. The total haul is expected to be over $2 million. Some of the individual bottles will likely sell for thousands and thousands of dollars each.
Wine values may seem foreign to many, but there are a surprising number of local families that have significant wine portfolios. For many high-net-worth families, wine collections are viewed as a part of an actual investment diversification strategy. The investment performance of wine has actually been strong. The Live-ex Fine Wine Investables index has been tracking values of certain wines for the past few decades. In the last twenty years the overall index of the top 200 wines has increased in value by about 1200%.
Our New York estate planning attorneys appreciate that all collections must be properly considered in planning efforts. Even those without significant financial value may be wrought with emotional significance, and so it is essential to ensure the collection is handled delicately.
Collections with significant value come with other considerations. For one thing, unlike many other assets, collections must be very carefully protected to ensure that they are properly cared for to maintain their value. This is obviously crucial with wine. Bottles that are dropped, frozen, overheated, or otherwise damaged will lose significant value with ramifications on overall planning.
For wine collections, it is important to keep a proper inventory and to accurately track value. Values change, and so these records should be updated regularly. In addition, insurance is important for particularly valuable collections, including wine. Regular homeowners insurance rarely covers damage to collections. Some collectors can obtain market-value coverage that protects against short-term price increases. Those with many bottles may prefer “blanket” coverage which provides protection for the overall value of the collection without the need to list the value of each individual bottle.
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