RINKER ON COLLECTIBLES — Column #1444
Copyright © Harry Rinker, LLC 2014
What Is Going to Happen to All My Stuff When I Die? Advice for the Collector's Executor(s) - Part III
This is the third of a three-column series based on two premises. First, a collector dies without a will. Second, the collector left no plan with a spouse/partner, child, or friend on how to dispose of his/her collection. This column series will not discuss the dilemmas and challenges faced by a collector when disposing of a collection while he/she is alive.
The first column in this series explored five premises that help explain why collectors die without a dispersal plan. The second column focused on three basic truths about the value of collections at the time of a collector’s death and a collector’s desire to leave a legacy. This is the practical column. It deals with the nitty-gritty of disposing of the collection(s).
When a collector dies without a will, state law determines the disposal procedure for the estate, the appointment of an executor or executors, and who is entitled to the proceeds from the estate. If the collector is married, the spouse is in the driver’s seat. If the spouse is not the mother/father of the deceased’s children, there are likely to be several backseat drivers more than willing to tell the driver how to navigate the estate road.
When a surviving spouse dies or the collector was single, the highway becomes a free for all. Those who move to the front of the estate road the quickest get their foot in the door first. Possession often is the key to who winds up with what. The key is to obtain court appointment as the estate executor.
The executor(s) controls the estate – no ifs, ands, or buts. When there is no will, the executor decides. It makes no difference what promises the collector made, what written instructions he/she may have left behind, or whose name is taped to the bottom of an object. The executor is not bound to honor any of these.
[Author’s Aside #1: If the collector does have a will, it is essential the body of the will contain his/her instructions for the disposal of the collection or a statement that the instructions on an attached document be followed. If the will contains no mention of the attached document, it is viewed as merely suggestive to the executor. The executor is free to ignore it if he/she wishes. Name labels on objects are meaningless. Again, the executor has full discretion to honor or not honor them. Forget any verbal promises. There is no way to prove they were made.]
An executor in charge of disposing of a collection has to face two inevitable facts. First, the heirs believe the collection is worth far more than it is. Second, no matter what disposal method the executor uses, the heirs will feel cheated. The executor covers his backside by blaming the seller/buyer of the collection, in most cases an auctioneer.
Executors often have their own agendas and self-interests, not the least of which is the fee they receive for supervising the dispersal of an estate. It is common for families to be torn apart in the fight over who controls and profits from the dispersal of the collection(s). Greed and the green-eyed god of jealousy are ever present.
For the purpose of this column, the assumption is that the executor is pure of heart and working for the best interest of the estate and its heirs. The executor’s goal is to obtain the maximum return for the collection and/or dispose of the collection in such a way that it contributes to the ease and quickness of settling the estate.
The first challenge of the executor is to secure the collection. The disappearance stories following the death of a collector are myriad. An object was present the day the collector died and mysteriously disappeared by the internment. Even the most innocent are sticky fingered and tempted at the time of death, especially if they are convinced that the collector promised one or more objects to them. All they are doing is taking the object now to save the need for a future return trip to obtain it.
The surviving spouse/partner or potential executor should immediately photograph or videotape the collection. Focus not just on the objects on display. Make a record of the reference library, files, and objects in storage.
Limit or totally deny access to the collection. If the burial process involves house calls and/or a reception at the home, either lock the doors to the areas where the collection is on display or post security guards (make certain they can be trusted) to watch over the collection.
[Author’s Aside #2: It the above seems paranoid, it should. More objects disappear from collections in the first week after the death of a collector than in all the weeks and months that follow.]
If the spouse or collector has no knowledge of the value of the collection, he/she should secure professional help as quickly as possible. The ideal situation is to employ an independent appraiser/collection dispersal expert. This expert is paid by the hour, is prohibited from buying anything from the estate, and is ethically obligated not to accept objects from the estate in lieu of fees. The goal is to hire someone whose only interests are directed toward being of service to the executor. As part of the services, this expert should present the executor with a variety of disposal options. The expert is obligated to reveal any professional contact he/she may have with any recommended disposal sources.
There are groups of individuals toward whom the executor needs to be cautious. The first are other collectors. Many a spouse or executor has been approached at a viewing or internment by an individual whose says, “x told me that if anything happened to him/her that I was to contact you and offer my services to help dispose of his collection.” Yeah, right!
The goal of this person and others of similar ilk is to get inside as early as possible and cherry pick the collection, that is to say, buy out the best and leave the executor stuck with disposing of the rest, also known as, the junk. Unfamiliar with a collection’s value, the executor often is tempted by these initial purchase offers.
Some auctioneers use the “free appraisal if I sell your things” method to open the door quickly. Many of these auctioneers do not write appraisals to USPAP (Uniform Standards of Professional Appraisal Practices) standards. The standard pitch is that the auctioneer will write a low appraisal to keep estate costs down.
Just the opposite applies. A collection/estate appraisal sets the tax cost basis for any objects inherited or received by heirs. Legally, if an heir resells an object, he/she is required to report the capital gain. The higher the value out of the estate, the less capital gain is incurred. In reality, very few people report the gain. However, one never knows when a situation arises when the cost base is important.
A client once asked me to help him dispose of an early baseball card that he found among the material he had retained when his father died. There was no record of the card in the estate. Hence, the client’s tax cost base was zero. The card sold at auction for over $40,000.
Executors can be overwhelmed by individuals who offer their helpful services—dealers who sold the collector objects in the collection, real estate agents who just “happen to know someone who can help,” and referrals from funeral directors, neighbors, and even the attorney. Beware of all these offers. Think hidden finder’s fee as opposed to altruistic motives.
Executors faced with disposing of a collection are advised to consult one or both of the following books: Martin Codina, Liquidating an Estate (KP/Krause Publications, 2012) and Harry L. Rinker, Sell Keep or Toss: How to Downsize a Home, Settle an Estate, and Appraise Personal Property (House of Collectibles, 2007). I have a vested interest in the latter and consider it one of the best books I have written. If you do not want to buy it, at least borrow it from your public library.As noted in a previous column in this series, collectors are happy to avoid any thought as to what is going to happen to the collection(s) when the collector dies. It is something that can be postponed to another day. If the collector never deals with it, what does it matter? When the collector dies, it is not his/her problem.
Rinker Enterprises and Harry L. Rinker are on the Internet. Check out www.harryrinker.com.
You can listen and participate in WHATCHA GOT?, Harry’s antiques and collectibles radio call-in show, on Sunday mornings between 8:00 AM and 10:00 AM Eastern Time. If you cannot find it on a station in your area, WHATCHA GOT? streams live and is archived on the Internet at www.gcnlive.com.
SELL, KEEP OR TOSS? HOW TO DOWNSIZE A HOME, SETTLE AN ESTATE, AND APPRAISE PERSONAL PROPERTY (House of Collectibles, an imprint of the Random House Information Group, $17.99), Harry’s latest book, is available at your favorite bookstore and via www.harryrinker.com.