VOL. 130 | NO. 74 | Thursday, April 16, 2015
Rays of Wisdom
Dana and Ray Brandon
Estate Planning and Your Collectibles
RAY and DANA BRANDON | Special to The Daily News
Ray's take: We’ve all heard those stories about someone inheriting Great Aunt Matilda’s Avon bottle collection and having no idea what to do with it. But the collection meant something to Aunt Matilda. She could have planned differently for her collection and it might have found a home with someone (or somewhere) who loved it.
Money is fairly simple to divide up, but a collection can be a real headache. Like anything, it can be sold, passed on or given away. But since its value is harder to estimate than publicly traded securities, even that process gets complicated. And keep in mind that the Internal Revenue Service expects its share, too.
Whether your collection consists of Avon bottles or art by the masters, it’s essential to get a qualified appraisal ahead of time so you know what you are dealing with.
Once you’ve completed that, you should consider your options.
Sell it. If you know no one who would truly love to have the collection, you can sell it off in your lifetime, pay the tax on the gain, and allocate the money however you wish.
Pass it on. If you do have a family member that would love the collection, you can use the annual gift exclusion to begin passing along the items while reducing, or eliminating, the tax burden. Be sure to file a gift tax return even though no taxes are due, just in case of an audit later.
Give it away. Sometimes you can find a museum that would be interested in having your collection. Smaller museums may want money to help with your collection. If that is the case, then a trust might be a good option for you. One important reminder – the qualified charity must make a related use of the gift. If you donate your art collection to a hospital that sells it, you can only deduct your basis. But if you donate it to a museum that displays it, you can deduct the appraised value.
No matter how you choose to handle the disposition of your collectibles, a financial expert can advise of you various options available.
Dana's take: If you have something you collect, it represents you and your passions and memories; and a price is not easily put upon that. But inheriting fine collectibles, antiques and art sometimes brings out unattractive qualities in people, one being greed.
A sudden death or incapacitating illness may cause you to have missed the opportunity to ensure that your collectibles are distributed according to your wishes. It’s best to sit down with your family and discuss the collection. Are there specific things that certain people want? And what if more than one wants the same piece?
Knowing that it’s all been settled ahead of time can give you a deep sense of peace and dealing with these issues before you’re gone can save a lot of heartache in the future.
Ray Brandon, CEO of Brandon Financial Planning, and his wife, Dana, a licensed clinical social worker, can be reached at brandonplanning.com.