New York Estate Planning & Elder Law Blog
One New York resident, now 65 years old and in retirement, has amassed a Las Vegas chip collection worth an estimated $500,000 over the course of two decades. However, he is childless, and no one in his extended family has expressed an interest in keeping the collection. He is also concerned that they will sell the collection for far less than its actual worth. Collectors can spend a lifetime accumulating things like baseball cards, comic books, casino chips, and art. However, too often these collectors do not think about what to do with these collections once they pass away.
The Need for Proper Planning
Many collectors hope that someone in their family or group of friends will enjoy their collection enough to keep it and maintain what they have done. Others think that another collector will pay a lot of money to their heirs for what they have amassed and assume that the heirs know what it is worth. Some hope that their collections will be donated to a museum in order to be displayed for posterity. However, none of these plans can be known for certain without proper estate planning.
If you do not state with certainty what you wish to have happen to your collection after you pass away, it could as easily end up in a yard sale as it could a museum. In addition, you and your heirs could miss out on valuable tax saving opportunities if you do not have an estate plan for these belongings.
Estate Planning Options for Collectors
There are a few estate planning options for collectors in regards to what they wish to have happen to their collections after they are gone. Each option comes with its own set of steps to ensure that your heirs follow through with your final wishes for your collection.
Passing on the Collection
If you wish to pass on your collection to your heirs, the most important thing to do is make sure that there is someone who wants to take it. You also need to make sure that your heir has the ability to maintain the collection and pay for any upkeep, including insurance and storage.
Other considerations for passing on a collection include how to compensate those heirs who do not receive the collection? If more than one heir expresses an interest in the collection, how do you split it up? If you split the collection, will it affect the value? Finally, if no one can afford the upkeep on the collection, are you willing to leave an endowment from your estate to maintain it?
Selling the Collection
If you wish to have your collection sold upon your death, the first thing that you should do is have it appraised, both as a whole and as any smaller lots you may think might happen in the selling process. Keep in mind that collectibles are taxed for capital gains at a rate of 28%, and the sale might be subject to other costs like commission and shipping.
Donating the Collection
A final option for collectors in estate planning is to donate their collections. Donation can be a complex and time consuming process. Some institutions only want part of a collection, and others want a donation of money in addition to the collection for maintenance and storage. However, donating to public organizations can also come with tax benefits for the current year and up to the next five years.