Estate Sale Planning: Realizing the true value of your collectibles.
Growing up, my family would head out every Saturday in search for garage sales. After two or three garage sales, my budget would be spent and I would lose interest. I remember struggling through the three hours of endless garage sales that ensued.
As an adult, I no longer devote Saturdays to garage sales, but if I see one that looks good on the side of the road, I can’t resist. I look for bargains and collectibles; stuff that has history or inherent value. The estate sales are the ones that really surprise me. As I look through endless amounts of items that were too valuable to discard by the owner, being discarded like yesterdays news by the heirs, my heart sinks. Think of the history… the stories behind these items. I usually look for those items and pick them up for a quarter, or a few bucks and imagine the story.
What will your garage sale look like? Are you a collector? Do your children know the heart and soul that you have poured into that collection of prints, or the civil war memorabilia? Do they know the history behind the tobacciana, or the miniature tea sets? Whether your collection is big or small, it has value. It is worth saving!!!
Unfortunately too many heirs will not comprehend the value of these specialized assets. To the estate sale they go. I can hear the conversation now, “Joe, how much are these paintings worth?” “I don’t know why dad ever picked those up, put them out for a buck a piece and if they don’t sell, we will sell the aluminum frames for scrap metal.”
Choosing the right heirs. To the right parties, these collectibles will be priceless. Ask the kids if they understand the value, ask if they are interested in specific pieces in a collection or in the entire set. If not, it’s time to look deeper. Who cares about these items?
Here is an example. A gentleman collected bronze sculptures. He and his wife cherished these items; they enjoyed collecting them together and displaying them in their home and in their yard. The couple worried that the kids had no desire to lug these things around. Meanwhile, on the other side of town, thoughtful citizens in the community were purchasing bronze sculptures and working hand in hand with artists to beautify the community. If this couple were to donate some of their favorite bronze sculptures to the community, they could spread that enjoyment to future generations to appreciate.
The many benefits of donating a collection. Donating collectibles not only preserves those items for future generations, but it offers a nice tax savings as well. Collectibles held for more than one year are taxed at 28% capital gains tax upon the sale, much higher than long term capital gains rate on stocks. Donating these items avoids the realization of that taxable gain.
If this type of property is donated to an organization to sell in a silent auction, or to take to an auction house, your tax deduction is limited to the price that you paid. However, if you were to donate antique farm equipment to the American Heritage Museum down the street for related use, then your tax deduction can equal the fair market value of the donation.
These deductions can be extremely valuable to many folks, especially those in higher tax brackets, or for those relying on tax-inefficient retirement accounts for income. Why not use these deductions to make a huge impact in an organization you care about and put these items to their best use?
In many cases an appraisal is necessary and you should always work closely with professionals that you can trust, including your accountant and attorney to get all the details right.
I’d love to hear about the collections that you love and your thoughts on which heirs or non-profits will treasure them most. If not, please have your kids let me know when the garage sale is!!!