From Bitcoin to Baseball Cards

“OK, Mr. Lewis, to recap, we have three investment accounts, the checking account, the Whole Life Insurance plan, your IRA and the home.”

There is a short pause before Mrs. Lewis speaks softly with a hint of derision, urging her husband: “Tell him about your tools.”

Mr. Lewis breathes in deeply, then speaks. “I have an antique tool collection … pretty big.”

Mr. Lewis has the pictures to prove it, and 19^th century planes, chisels, hammers, saws, and braces fill a garage on his property. Many of these tools are valued at over $100. These are not knickknacks to be donated to Goodwill or sold at a garage sale. The tool collection is an asset class that needs to be organized and coordinated.  

Nontraditional assets make up a portion of most estate plans. You may not have Andy Warhol Campbell Soup cans adorning your walls, but your vintage cookware added together may be worth five figures. Even if your loved ones would rather not store your old Pyrex glassware for posterity, setting up a logical plan for their disposition is a smart planning objective. 

The first question that has to be asked is: does anyone actually want this? Maybe an adult child shares your passion for collecting baseball cards and will cherish your collection and add to it. A specific disposition in your Last Will and Testament can direct that your cards go to that adult child. For lower value collections that are more sentimental in nature, this option works well.

An alternative to specific Will dispositions is the Letter to My Executor. We often encourage clients to prepare letters to their children or executors that instructs the division or donation of nominally valued personal collections to avoid an unwieldy and overlong Last Will and Testament, detailing every juice glass and sewing needle. These letters do not have the same legal force and impact as a Will, but they serve an important organizational purpose – articulation of your wishes.

If you give an executor discretion, under your Will, with regards to distributing your personal effects, then the Letter can help guide their decisions. Keep in mind that any estate asset listed in a Will is subject to a valuation for potential accounting. If one adult child gets the collection and the other adult children believe they are receiving a lower inheritance value, then problems may arise.

After the first question is answered by your people with a resounding “no,” the second question is how to properly dispose of the collection for the benefit of your estate and your beneficiaries. We’re talking about items with actual and intrinsic value. A video game collection that includes unopened 1980’s Nintendo cartridges should not be sold in bulk.

One way to intelligently plan for a collection like this is to have a Living Trust that individually lists the valuable collectibles and directs the trustee to utilize the correct valuation tools and auction outlets to sell the items for maximum value. Gift memorandums to the Trust should specifically describe the collectible, allowing it to be legally “transferred” to the Trust – removing it from Probate. Your knowledge of your collection and the marketplace is crucial, because without it, your trustee will be clueless as to the actual value.

Digital currencies and NFTs offer another challenge. These assets may not have a simple beneficiary framework allowing them to pass outside of Probate. Transfer of these assets to an account that can be owned by a Trust is vitally important.

This leads us to the third question: are your nontraditional assets valuable enough to trigger estate tax implications? You may be the worst stock picker in North America and a terrible saver, but you had an amazing eye for emerging artists in the early 80s and picked up a few Basquiats and Harings.

Estate tax planning through Trusts may be a necessity for you. The only way to know is conduct an appraisal and work with estate planners with extensive collection experience.  

This is my favorite part of planning. A money market account is fine, but a 1961 Topps dice game test-issue Mickey Mantle is finer. Watching a client’s eyes light up when discussing their Lionel Trains collection or their art glass is the coolest thing ever.

When estate planning addresses the whole person, the best results usually flow.

Alan D. Feller, Esq., is managing partner of The Feller Group, located at 572 Route 6, Suite 103, Mahopac. He can be reached at alandfeller@thefellergroup.com.