John Bullis: Thinking About Your Collections and Treasures
Submitted by editor on Tue, 09/13/2016 - 12:10pm
It is difficult to do estate planning on how to handle your special collections and treasures. Those are items with an emotional attachment as well as whatever they are worth in dollars.
Basically you could consider giving items to a charity (museum, university or other non profit). Or you could consider selling some or all of them during your lifetime. You could make gifts to family (and friends) now, or leave those special items to them by your Will or Trust when you die.
If you give the item(s) to a public charity, you might want to give some cash to them also so they can maintain them correctly. Some charities, especially museums have a lot more items than they can display currently. If the charity uses the property in their basic operations, the fair market value is an income tax deduction (Schedule A of form 1040) that reduces your income tax. If the deduction is more than allowed in the year of the gift, the balance carries over and can be a tax deduction for you in the next five years until you have claimed it all.
Whether you give it to a charity or you consider selling it, you should get a qualified appraisal. That’s not easy since in some cases it is difficult to find the appraiser that is experienced in valuing your items.
Selling some of your special collections and/or treasures is not easy either. You need to find the buyers of those items. You might take good photographs and write up the history of the item to have something to provide to possible buyers. It is important to keep track of the tax basis (cost) of the items as best you can. If you inherited it, the correct tax basis may be the fair market value at the date of inheritance. A different tax basis applies if you received it as a gift-you use the tax basis of the person that gave it to you.
If you plan to leave the items to charities or persons when you die, you could gather the information together along with the names and contact information of possible qualified appraisers. It might be time to ask your family members who has the desire and ability to handle your items. Then you might want to include in your estate planning documents (Will, Trust) who gets which items. You might consider giving that person some additional cash so they can maintain it properly. That means you might give more of other assets to the others that will inherit from you (to make a fair and equitable distribution to all of your heirs).
First get the appraisals. We just started helping some folks where the decedent felt some items were only worth $500 each or so and it turns out the answer is over $10,000 each.
Did you hear: “A well adjusted person is someone who can play golf or tennis as if it were only a game.”
— John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for more than 45 years. He is founder emeritus of Bullis and Company CPAs in Carson City.
