“From a financial safety perspective, it's generally best to view collectibles more as a hobby than as a way to make money," says Bill Johnston, Managing Director and Head of Private Banking Solutions. In essence, any potential monetary gains from collectibles are best viewed as a fringe benefit, a bonus that serves as a validation of the collector's keen eye and good taste.
“Collectors should absolutely have an inventory or catalog that captures important details about their collectibles," says Jere Doyle, Senior Vice President and Estate Planning Specialist. “It should include where and from whom they bought them, for how much, and any other distinguishing features of the item."
Even if your primary motivation for building a collection is personal enjoyment, consider taking steps to preserve and safeguard your collectibles — such as purchasing specialized insurance, having your items appraised by a certified expert and making accommodations for proper, long-term storage, whether in your home or in a professional storage facility.
Failing to take collections into account when making decisions about your wealth and estate plans can have serious financial consequences. It's important to recognize and account for their value as you would any other financial asset.
Donating valuable collectibles to a charitable organization is a great way to support a cause you care about and take advantage of a significant tax deduction. Additionally, gifting an entire collection to a charity or other non-profit can help to avoid potential liquidity issues around the estate tax and create a lasting legacy for your life's passion.
1 Adam Teeter. “How China Inflated a Global Bubble in Fine Wine & Spirits – And Then Popped It," Vinepair, April 15, 2015.
2 Tanya Powley. “How to Invest in Art," Financial Times, February 1, 2013.
3 IRS. "Topic 409 - Capital Gains and Losses," As of May 1, 2017.
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