For decades, you have accumulated an assortment of collections. Some people may call it junk. However, these are mementos, some handed down by relatives, but most purchased carefully by you through the decades. On the surface, you understand that collectibles are primarily valuable to the collector. But, not necessarily. Some prove quite valuable.
Not only have you devoted a great amount of money to these collections, but you also have invested a great amount of emotion. But what will happen to these assets once you die? This lengthy list may include modern art, antiques and collectibles such as Hank Williams’s handwritten lyric sheets, a guitar once owned by Johnny Cash, a one-of-a-kind Nudie suit that adorned Roy Rogers and rare Carter Family 78 records.
Sell, donate or give them away
Addressing collectibles is, sometimes, an overlooked aspect in estate planning. Naturally, it is a good idea to plan early and make your intentions known. Here are some potential solutions, all of which carry some type of tax consequence:
- Give them to beneficiaries: A portion of these collections will land with beneficiaries. But, in many cases, your heirs may not want them. The millennial and Generation Z generations seem to be more minimalists when it comes to material things. However, valuable collections can be bequeathed to heirs who want them. In fairness, you may have to split up collections and also provide an endowment to maintain them.
- Sell them: Patience is a virtue that you must have when you or the executor sell collections. It likely takes time to find the right person who wants the collection. By selling them during your lifetime, you could use the money to create a trust. Famed baseball broadcaster Vin Scully sold his mostly Dodgers memorabilia last fall for more than $2 million. Scully planned to use the money to pay for the educational costs of his grandchildren.
- Donate them: This is an obvious solution as some nonprofits, museums and universities may accept them. But, in many cases, unforeseen complications exist. For example, a nonprofit may ask for cash donations in order to maintain and store the collections.
Preparation on your part will go a long way in determining what happens to your collectibles, some of which are valuable. You want them in the right hands after you die, so make sure to address this issue in estate planning.