ESTATE PLANNING

FOR YOUR COLLECTION

When it comes to estate & charitable planning, your collection is a financial asset that requires careful consideration.  A financial-based strategy will make it possible for you & your heirs to realize the full potential of your collection, from both a philanthropic & a financial perspective.

If your goal is to minimize your capital gains & estate taxes, then your estate & charitable planning options may include:

• Strategic selling,

• Donating to a museum,

• Putting the collection in a trust or limited partnership, or

• Setting up a private foundation.

Determining Your Collection’s Value

The general rule for federal estate tax, gift & income taxes is that items are valued at their Fair Market Value.  In most cases, the Fair Market Value will need to be determined by a qualified appraiser.  If you are making a gift of art work or a collection worth more than $5,000 to charity & want an income tax charitable deduction, the item must be appraised by a qualified appraiser.  Spalding Nix is a qualified appraiser & certified member of the American Society of Appraisers.

Gifts to Charity

Charitable gifts & bequests of your collectibles can be a tax-efficient way of keeping your collection intact.  Issues to consider include:

• Outright charitable gifts verses alternative transfer planning or charitable remainder trusts.

• The relationship between a charity’s exempt purposes & ceilings on income tax charitable deductions.

Gifts to Family & Friends

There are also non-charitable techniques that allow you to remove items from your estate on a tax-advantaged basis.  To minimize your exposure to federal & estate tax while passing ownership of your property to your desired beneficiary, you should consider:

• The Annual Gift Tax Exclusion.  As of Janury 1st, 2009, you may make annual exclusion gifts of $13,000 ($26,000 for a married couple) per beneficiary each year, free of federal gift tax.

• Placing your collection in an LLC.  You can then use the annual gift tax exclusion to make gifts of interest in the LLC to family members.  Over time, they will gain a significant ownership interest in the LLC, which holds the collection, & you will have reduced your taxable estate at no tax cost.

It is always advisable to work closely with an appraiser & a knowledgeable attorney who can help ensure that the transfers meet all tax requirements.  As a qualified appraiser & lawyer, Spalding Nix is available to assist you in your succession & philanthropic planning.