Estate Planning For The Collector
By Ted Ritter
As a Collector, you have undoubtedly spent many hours searching for, purchasing, restoring and caring for your antique, classic, muscle car or hot rod. What is to become of it when you die? What about your spare parts and tools?
Estate planning for the Collector presents several unique challenges. In other respects, the process involves the same elements as all estate plans.
The Collector’s primary planning goal will be to assure that his or her unique assets are properly distributed.
A secondary goal is to enable those assets to be properly managed and protected during the probate process (i.e. after death but prior to distribution).
A key requirement is that the executor or executrix chosen by the Collector must understand the Will and the unique challenge that it presents.
Always lurking in the Estate planning process is consideration of (Federal
Estate and New Jersey Transfer Inheritance) tax implications. The Collector, as any person preparing to make a will, must recognize that probate and tax laws are in a perpetual state of flux. They have to be considered a moving target.
A Collector’s prized assets fall into what lawyers, judges and the courts label tangible personal property. The distribution of the collection or any uniquely valuable, personal assets is best segregated into a specific bequest in the Will (as contrasted with merely making the collectibles part of the residuary Estate).
In terms of distribution, if the Collector is married, he or she must make a decision whether the collection or collectible item (e.g. antiques car, hot rod, stamp collection, coin collection, etc.) should pass to the Collector’s spouse. It is often the case, however, that the spouse is not really interested in the Collector’s hobby. In that instance, the collection can be distributed to some other beneficiary or the Collector can plan for its orderly liquidation with the proceeds of sale of the Collection passing into his estate.
When it is the Collector’s intention not to bequeath the collection to a surviving spouse, the Collector must give special thought to the selection of the executor or executrix or perhaps, the designation of a particular individual or entity to take possession of, appraise and liquidate the collection. For example, the Collector’s Will might provide:
“I direct my executor to consign my 1931 Model A Deluxe Roadster to XYZ Antique and Classic Car Sales of Vineland, New Jersey for the purpose of liquidation. The net proceeds of sale of such automobile shall then be paid into my residuary Estate and distributed in accordance with Clause IV”.
A related, but sometimes overlooked mechanism for the preservation of a Collector’s prized assets, is the execution of a durable Power of Attorney. In it, the Collector designates someone to act in his or her place if the Collector becomes unable to manage his or her own affairs. The preparation of a durable Power of Attorney is simple, quick, and inexpensive. In our office, for example, the normal cost is only $75.00.
I am sometimes asked about self-help “Will kits” which can be purchased from some stationary stores or accessed through your computer. I caution against the use of these. Accomplishment of your Estate planning goals requires an element of precision which lawyers are trained to employ. A layman, using a self-help Will kit, may choose a word or phrase which may be unintentionally imprecise. Many words and phrases used in the preparation of Wills and Powers of Attorney are, in fact, words of art.
Additionally, a do-it-yourselfer’s failure to follow the strict formalities of will execution procedure all too frequently causes homemade wills to be ruled invalid. It’s for these reasons that I discourage the self-help route.
Every Collector should have an attorney-prepared, durable Power of Attorney, just as every Collector should have an up to date, attorney-prepared Last Will and Testament.
Okay, now you’re convinced of the need. Where do you begin?
Start the process by making a list, one item per line, of the cars and other items that comprise your collection. Include spare parts, literature and your tools. Don’t forget that NOS chrome which you tucked away in your garage attic 20 years ago!
After you’ve taken inventory, jot down, next to each item on your list, how you would dispose of that item if you suddenly learned, with certainty, that you did not have long to live.
Once that is done, telephone your attorney and make an appointment for the preparation of your Will and Durable Power of Attorney.
Here’s one final piece of advice: don’t procrastinate. None of your prized items is likely to bring its true value unless you have made appropriate arrangements.