Art Is In The Trust Of Fhe Beholder… Or Is It?

The Wall Street Journal is shining the light on a different kind of estate planner: the diehard collector.

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Whether it’s comic books, baseball cards, home video libraries, music memorabilia, Disneyana, or what have you, collections can grow enormous over a lifetime. And with enormity comes value.

But as the Journal points out, the same aficionados who work so diligently to amass a dazzling collection during life often fail to make provisions for their allocation after death.

In deciding which beneficiaries to leave a collection to, and under which terms, there are a lot of things to consider: personal interest, the cost of storing and maintaining the items, the higher rates at which those gifts may be taxed, etc.

One option, of course, is to set up a trust to hold the collectibles during life or after death. Another is to gift part of the collection annually in order to reduce the total size of the taxable estate while staying within the tax-free gift-giving threshold each year.

Charitable donations are an option too, as are good old-fashioned sales. The collection can even be split up, with different portions distributed differently.

Whichever approach works best for you, you’ll need to be thorough in your paperwork and making sure you understand the tax liabilities for each decision. You’ll also likely need to have the collection itself professionally appraised so that you have an actual dollar amount to work with when making those decisions.

If you’d like to chat about the interesting things you collect and how you can best protect them for the future, feel free to give me a call. I’m happy to help.

 

Don’t Give Away Money Until You Know You Won’t Need It

Many in their 50s and older are thinking about gifting money to their adult children. Many are unsure if they can afford to do so. That’s because the real question they are asking is whether they have saved enough for themselves in retirement.

(Photo credit: Wikipedia)

(Photo credit: Wikipedia)

An article I read on marketwatch.com really zones in on this thorny question and suggests that many people won’t really know the answer to well into older age.

About 17 percent of wealth transfers occur while the giver is still alive, the story says. People enjoy seeing how their gifts are used to improve their loved ones’ lives. They also realize that if they wait too long to give, their heirs will already be old and into retirement before they get a chance to see any money.

But the story says that givers must consider the costs of long-term care when they are doling out gifts. Seven in 10 people are going to need help one day. And Medicare isn’t going to cover long-term care costs in most cases.

If you have long-term care insurance, you are probably going to be more comfortable giving money away while you are still alive. If you don’t have it, you probably will want to be more conservative in your gifting.

Nursing home costs run at least $10,000 a month in most places and most people who need one are going to be there for a few years. Home health aides, if you plan to stay at home, can run $20 an hour.

Medicaid pays for many people’s nursing home stays but you can’t just give away your money to meet the rigorous low income requirements to be covered by that program. There is a five-year look back period.

As a result, the article recommends you having enough money in the bank to cover at least five years of nursing home care before starting to gift to others. That’s about $600,000.

And don’t give away money thinking your children will give it back in the event you need it, the story warns. There may be many reasons why they can’t or won’t give it back.

Some people get around this issue by giving away possessions, like a beloved family piano, for example, rather than cash.

But the bottom line, the story says, is that you don’t owe them anything once you’ve raised them and educated them.