If you collect anything of value, figuring out what to do with the collection is an important part of estate planning. Any decision you make is likely to have tax consequences for you or your heirs.
It does not matter what you collect. It could be art, antiques or movie memorabilia. Whatever it is, if the items in the collection have significant monetary value, then deciding what will happen to the collection has important financial considerations for you and your heirs.
This was the subject of a recent article in the New York Times titled "Financial Considerations for Collectors of Art, Antiques and the Esoteric."
If you choose to sell the collection before you pass away, then you are likely to face steep investment income taxes if the items in the collection are sold for more than you paid for them. In some places this can be as high as 45% or more when federal, state and municipality taxes are taken together.
Alternatively, if you decide to pass the collection to your heirs, then the value of the items in the collection will increase the overall assets in your estate, which itself could have estate tax implications.
It is also possible that your heirs might have no interest in keeping the collection.
Another possibility is to donate or lease the collection to a museum. If done properly, you can receive tax benefits for doing that. However, for many collections it can be difficult to find a museum that is interested in displaying the collections.
Whatever it is that you think you might want to do with your collection, you should consult with an estate planning attorney before doing anything. What happens to the collection can and should be part of an overall estate plan.
If you want to learn more about Estate Planing in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.
Reference: New York Times (Nov. 27, 2015) "Financial Considerations for Collectors of Art, Antiques and the Esoteric."