Collectibles and Your Estate Plan
When planning out how you will divide your estate amongst your heirs, many people often forget about their collections. Whether you collect fine art, model figures, comic books, or trading cards; having an estate plan in place can be important in protecting and distributing your assets.
What is Considered a Collectible?
The IRS holds a definition of what constitutes a “collectible” asset. This can include works of art, rugs, antiques, metals, gems, stamps, coins, aged alcoholic beverages, or “any other tangible personal property that the IRS determines is a “collectible” under IRC Section 408(m).” Items such as cars would be considered regular assets, even if you have multiple. Comics and trading cards are included in this.
Monetary Value of Your Collection
The monetary value of your collection can be an important factor in determining how you should proceed with your estate plans. If your collection has significant monetary worth, you should discuss how to proceed with your estate attorney. Collections of fine art or cars, for example, should definitely be a part of your estate plan. More expensive collections of figures or trading cards might need to be covered in your estate plan. Appraisal by a professional may be required to give you a better estimate of the value of your collection.
The sentimental value of your collection may have some sway in your planning decisions. You may want to leave a collection with stipulations on upkeep and care. If there isn’t as much sentimental value, or you want your loved ones to benefit from the value of your collection, you may want to plan for liquidation.
As part of your estate plan, you can select executor(s) for aspects of your estate. You can name a trusted individual to help care for your collection best. An executor should be someone with an understanding of how to best deal with a collection. For many collectors, this can be a trusted friend in the collecting community or a trusted shop owner. An executor may be charged to evaluate your collection or liquidate it for your loved one. You might also want them to divide the collection by value and distribute it across heirs.
Distributing your Collection to Those Who Will Appreciate It
Many collectors want their collection to be made the most of. As such, they may leave it to a friend or family member who will appreciate it. A child who shares a love for the collection or trusted friends in the collection community could be potential heirs. This can be a common option for those who use their collection, as with trading cards. Some people who play trading card games choose to bequeath their collection to those that understand the value of the cards and will make the most out of them.
Donating Your Collection
Some people choose to donate their collection to a federally exempt, non-profit, or other charitable organization. If you decide that this is a good option for you, be sure to inquire with that organization about the donation process. You should consult with your accountant regarding the benefits or liabilities of a donation.
Revising Your Will
Collections can grow and shrink over time. It is important to update your estate plan over time to best reflect your collection’s assets. For collectibles such as trading cards which can fluctuate in value often, having a record of what your collection entails can be an important step to take. That way, as values change, you at least have a record of what physical assets you own. Your estate attorney and financial advisor can help you determine how to best keep a record of your collection.
Matthew Funeral Home does not provide legal or financial advice via articles. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for legal or financial advice.
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