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Mar 28, 2017

How do you pursue estate planning for unique assets?

“Someone’s in for a shock,” I thought to myself as I eased the throttles forward, accelerating the plane down the runway. Our stop for fuel had been a brief one, en route to visit a client; and while we were on the ground, the airport attendant had mentioned that a rare Beechcraft Duke based there was about to go up for sale.

Its owner, a successful local businessman, had died five years earlier, and the estate was finally ready to sell.

THE CHALLENGE OF COLLECTIBLES

If collecting wine is your passion, a five-year delay in its disposition is seldom a problem, and may even be beneficial. But if your fascination lies with rare automobiles, vintage boats or aircraft, you may be leaving your heirs an asset neither they nor your advisors understand, and one which may depreciate significantly with the passing of time.

The Beech Duke is a prime example: The value of this twin-engine aircraft hinges primarily on the condition of its high-performance engines, and even a month of inactivity allows the cancer of corrosion to set in, a fact this aircraft’s owner undoubtedly knew.

His widow, however, apparently did not. The executor probably thought an airplane nestled safely in a hangar, not flown for half a decade, was an appreciating asset, when in fact its value had deteriorated 30 to 40 percent. Boat and car collectors could share similar stories.

If your fascination lies with rare automobiles or vintage boats, you may be leaving your heirs an asset they don’t understand.

WHOM DO YOU CALL?

Acquiring something which few others in the world own is part of the appeal to collecting, yet this same exclusivity can create headaches for whoever you have tasked with settling your estate. Establishing the value, and finding a buyer for, a 10-year-old Corvette is child’s play; but, should that “used Corvette” be one which campaigned at LeMans in the 1970s, the circle of people who understand such a rare automotive asset and how best to dispose of it becomes very small indeed.

The thoughtful collector, then, should augment his or her estate plan with a memo spelling out the keys to this secret society, starting with names and contact information for trusted brokers, appraisers or auction houses.

For collectibles of a mechanical nature, whether they be a Wurlitzer organ, a Beech Duke or a Chris Craft runabout, the estate plan should include those technicians who can put the asset into top condition and, if necessary, maintain it during a lengthy sales process. Finally, the plan should list a few other collectors the collector has been friendly with, who could serve as a sounding board for the deceased’s spouse or executor.

DISPOSITION GOALS

Perhaps you’ve waited years to acquire one rare item or have painstakingly built a collection over a lifetime. Your goal might be to have this asset benefit a particular organization, or you might hope your collection can be preserved in a museum for others to enjoy.

Such bequests will often be politely declined, so explore your options now, while your passion and expertise have a chance to influence the decision. Consider leaving your executor with a range of options to pursue, should that “ideal” plan fail to materialize.

Finally, as unappealing as it might sound to simply have your treasures liquidated, if a quick sale will eliminate stress, delay and uncertainty for the people you love, you might be leaving them the best legacy of all.

This article is intended for informational purposes only and should not be construed as personalized investment advice. Please see your financial professional regarding your specific situation. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNERTM in the United States., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. Savant Capital Management is a registered investment advisor. Please contact Savant to find out if the firm is qualified to provide investment advisory services in the state where you reside. Savant’s marketing material should not be construed by any existing or prospective clients as a guarantee that they will experience a certain level of results if they engage Savant’s services. Please see important disclosures at savantcapital.com.

This article was originally published in the February–April 2017 issue of Worth.

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