How do you will away the collection of a lifetime?
If you’re a collector of any sort, you may have dozens, hundreds or even thousands of items belonging to your collection — but it can hard to decide how (or even if) you should separate them out when it comes to your heirs.
The harsh reality that many seniors face is that the things that they collected in their lifetime may not hold the same emotional value for their heirs. If you have a small fortune invested in Precious Moments figurines, your Gothic granddaughter may not have the same appreciation for your collection that you do and enjoy her inheritance the way that you hoped. If you leave all of your Woodstock memorabilia to your nephew because he’s the only relative that showed interest, you may end up hurting relatives who wanted to auction the collection off and turn it into college savings plans for the grandkids.
You could also be putting either of those heirs in an uncomfortable position with the Internal Revenue Service (IRS) if the collection has significant monetary value, because the IRS expects to get its share of the inheritance in cold, hard cash. A heirloom collection could be forced up for sale even if your heirs want to keep it, unless they have the money to pay the taxes on the collection once you’re gone.
Many collectors and financial advisers suggest that collectors take some specific steps when planning what to do with their collections:
— Have the collection appraised. Then you know the actual monetary value and will know what sort of estate taxes your heirs might be looking at if they get the whole collection.
— Divide up individual pieces and pass them onto others who want to keep them while you are alive. If you stay under the IRS’s rules for gifts, you can avoid taxes on the pieces altogether.
— Sell off anything you’ve enjoyed that you don’t think your heirs will feel the same way about before you die and put the money into a trust or other form of inheritance that’s easier to divide (and safer from taxation).
For more information on how we can help you divide your property and make you estate plans, please visit our page.