Many families consider themselves accumulators of “stuff” as opposed to collectors of fine art or other collectibles. We collect things that fill our homes, our lives and our memories. As I became more aware of their sentimental importance, I also began to realize how neglected these assets can be by the collecting families. One reason that the matriarch and patriarch do not mention the familial importance to their children and grandchildren is that they may not think of themselves as collectors. Collectors may collect books, corvettes, wines, jewelry, furniture, china, and cookie jars that fill up their lives, but they often fail to note the importance of their collections in family discussions. Think of how much it may mean to future generations to know that the collectibles that remain in the family were purchased from a young new artist or writer while the founding matriarch and patriarch were on their honeymoon, or that perhaps an important wine collection started as the result of a family trip to Europe while the children were still young. For collectors of assets with not just sentimental value but also great monetary value, it can be essential to plan accordingly.
Art, antiques and other collectibles are often not properly addressed in the estate planning process. It is quite common for the estate planner to not ask about tangible personal property except in a cursory way under the rubric of household possessions. Likewise, collectors are often reluctant to address the subject and just do not realize the extent that their items may have increased in value- many families are shocked when an appraiser places a value on a collection. There can also be tax implications when a valuable is transferred or sold which may result in unexpected penalties and interest if not properly planned. In some cases, moving art or objects from a deceased family member’s home to a surviving relative’s home could be considered tax fraud if not reported.
Recognizing the various components of an asset’s value can be very important. Ownership history, the celebrity of prior owners, or the display history in a museum can each add value to an object. Value can be diminished if there are few clear title transfers, if there are gaps in the title chain or if the asset was subject to questionable transactions. Maintaining the condition of the object is also of course a critical element of value, and conservation or restoration may be worthwhile considerations. The list of what can affect an asset’s value can be non-exhaustive and can vary depending on the type and history of the asset.
Art and other valuables can be excellent vehicles for a family to be philanthropic. If a specific object is donated to a related use organization like a museum, in some situations the donor may be able to deduct the fair market value of the piece. Collectibles can also just be a great way to promote enduring intergenerational legacy, and financial assets might not hold the same emotional power. Thoroughly review your inventory of personal property and work with financial and estate planning advisors to maximize the benefits of your collections to yourself, your family and your community.
