A portion of assets to change hands will be held in valuable collections – works of arts; jewelry; artifacts; wines; musical instruments; and other property that may be difficult to put a price on.
Decisions about how to value these assets will be a factor in estate planning going forward. It also bears upon issues of probate when those assets are subject to probate.
To add to the difficulty, values of assets like jewelry, antiques, property and artwork can change significantly over time.
The Five Steps for Your Collections
First: Keep a good inventory of all assets, liquid (like cash and stocks) and non- liquid (like the aforementioned collections). It is very helpful to maintain records - date of acquisition and source; price paid; and any expert certified valuations that were done.
Second: Communicate your wishes. Will your decision be to sell valuable (non- liquid) assets or bequeath them to a future generation? Do you want to donate certain collections or gift them outright? There are financial issues like step- up- basis and taxes to consider. There are also estate planning mechanisms like a Charitable Remainder Trust that are available.
Third: Know how to determine the value of certain assets. For example: Using either a ‘free’ appraisal or online comparison versus having a qualified certified appraiser for more valuable collections.
Fourth: Keeping the collection secure and properly insured is critical.
A story comes to mind of someone who had an interesting wine cellar. A time came when there was a ceremonial opening of one of the pricier bottles..only to find that the contents had a rancid taste. How then to value the remaining inventory in the wine cellar?
Note: If you are a discerning wine collector – or merely an enthusiast – one source is the magazine Wine Spectator for ideas about the valuation of wines.
There are similar magazines for other collectibles.
Fun factoid: One bottle of 1945 Romanee-Conti was sold by Sothebys New York for $558,000. The total collection, from the personal cellar of a wine producer sold for $7.3 million. Which should have the oenophiles out there whimpering!
Point of Law: There are state laws governing the sale of alcohol without appropriate license.
Fifth: There is the consideration of ‘fairness’ when determining the disposition of valuables. In the case of dispersing certain of your pricey items among family members, fairness may not necessarily mean ‘equal’. As an example, you may choose to gift a valuable painting to a sibling who has always expressed an interest in the beauty of the piece.
In a previous article I wrote… Valuing assets (such as artwork) is more of an art than a science.
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