Saturday, February 25, 2012

In Estate Planning, Making Plans For Prized Collections

The New York Times has an article "Making Plans For Collections, Heartstrings Included" about what happens to collections (art, comic books, marbles, Christmas villages, antiques, etc.) when someone dies.

Money is relatively easy to divide up but how does a collector decide what to do his or her prized collection that it has taken years to amass and reflects a passion that may not be shared by the heirs? The collection may also be hard to value.

The article shares the options available to collectors:

(1) Selling the collection before one's passing;

(2) Passing on the collection and keeping it in the family by using methods such as the annual gift exclusion of $13,000 or creating a trust to protect the collection from creditors;

(3) Giving it away to museums or charities depending on the collection; or

(4) Creating a charitable remainder trust which is especially useful for collectibles that are taxed at a 28% rate.

The real point of the article though is that it is not simply the value of these collections but the emotions that are involved in them that create the issues in deciding what to do with them in estate planning. This is why planning is key even though it is something that is simple to put off. It is typical to put estate planning off but a good way to get around the emotions is to hire an estate planner, schedule meetings and create an outside structure that requires one to address the issues -- emotional or not -- that typically arise during estate planning.

Posted by Henry (Hank) J. Moravec, III, a partner at Moravec, Varga & Mooney. For a complimentary 30 minute consultation (telephonic or in person), you can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 or (818) 769-4221.