You worked hard all your life and have amassed significant assets and resources. You intend to pass your property down to your heirs in as fair a manner as possible. But one area of your estate plan gives you particular pause — your collectibles.
People collect almost everything under the sun. Certain collectible items like museum-quality paintings and other types of art have an inherent value and must be appraised professionally in order that they be accurately determined. But when there are other, more obscure, collectibles, e.g., your Paul Stanley guitar or mint-condition Roberto Clemente baseball card, it may be more difficult to assign a value to these items.
Specialty appraisers can help
Obscure items you collect still have worth, but determining their true value can be tricky. The average collector may care nothing about the Stanley guitar, but a collector of rock 'n' roll memorabilia might pay top dollar for the KISS guitarist's axe. Your job is to determine its worth, and that might require seeking an appraisal from a rock memorabilia appraiser.
When the value is less clear
Some items in your collection may have little monetary value but great sentimental value for your heirs. In fact, estate planning professionals often find that it's these items that can most divide a family.
A frank discussion with your heirs can often provide great insight into your proposed estate plan. For instance, your grandson in the military might be greatly honored to receive pieces from his great-great-grandfather's WWI shaving kit, while your niece would prefer that piece of the family's turn-of-the-20th-century mourning jewelry. Opening up a dialogue with your potential heirs can clear up any confusion on the matter.
Selling tangible personal property
Most people will not have to worry that their collections will exceed the limits of the federal estate tax exemptions. Unless you have a few Picassos or Warhols hanging on your walls, it's likely that your items will come in far below the $11,400,000 limits.
If there is much dissension among the family members over the future ownership of collectibles, it might be more fair to order they be sold and the proceeds split between the heirs. That way, anyone who is especially attached to a particular piece can arrange to purchase it and keep it within the family.
Failing to report property can cause problems
Let's say that you have a certain valuable piece that you have never declared or had appraised in your lifetime. If, after your death, the Internal Revenue Service (IRS) learns of its existence during an estate audit, your estate's executor could face both criminal and civil penalties. The last thing that you want to do is create headaches for your heirs and executor, so it is always best to be forthcoming about a collectible item's value.
Establishing an accurate date-of-death value for your collection is important in order to fairly represent its cost basis if your heirs decide to sell off your collection. Your Tucson estate planning attorney can best advise you on how to proceed with determining value on collectible items in your estate.