A Will Isn't Enough Anymore: How to Keep Million-Dollar Collectibles From Breaking Your Estate Plan

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From fine wines to vintage guitars and Birkin bags, high-end collectibles have moved beyond the realm of the ultra-wealthy. As more investors fold million-dollar collectible assets into their portfolios, a new question emerges: What happens when your investment surges in value and traditional estate plans fall short of protecting it?

"Without specialized estate planning, these valuable assets can lead to millions in taxes, family disputes, and forced sales," Matthew F. Erskine, a trusts and estates attorney, wrote in a contribution to Forbes.

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Strategies for Estate Planning for Collectibles

Consider taking these steps so your family will know the value of your collection, understand what to do with it and avoid large tax bills.

Maintain a Detailed Inventory

Write descriptions, take photographs and note the condition of items in your collection. Include certificates of authenticity, a history of ownership, policies for insurance and instructions for care.

Seek Professional Appraisals

Have a professional appraiser provide the fair market value of your collection regularly, perhaps for your annual financial planning update.

Decide How to Distribute Your Collectibles

Choose from among these three options for distributing your collectibles: leaving them to your heirs, donating them to a charity or selling them while you're alive and distributing the proceeds.

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Choose the Right Executor or Trustee

Select a fiduciary with experience in valuable collections or with the means to hire a professional with collectibles experience.

Formalize Your Plans

During estate planning, include your wishes and a detailed inventory, valuation and distribution plan in your will and trusts.

Talk to Your Loved Ones

Take the time to sit and talk with family members about your collectibles so they know what's in your written plan and how it may impact them. They also need to understand what your collection means to you.

Wills are just one piece of a comprehensive estate plan, and they often are insufficient for addressing tax implications, complying with legal regulations or mitigating potential family feuds.

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With collectibles, your plan should include specific legal instructions and documentation. Hiring a financial advisor skilled in dealing with collectibles can also help smooth the process.

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Digital Platforms Can Improve the Process of Executing an Estate Plan

Even with clear instructions on handling your collections after you're gone, the tools of traditional estate planning may not be up to the task of documenting the value, location, or desired fate of your collection.

Taxes can eat value away from your estate, or your heirs don't receive what they were supposed to. Often, these issues can be traced to confusion: The family is not up to date on wills or trusts, they don't have access to passwords or collection documentation, or they don't know where your collection is located.

"Legacy planning isn't just about documents," Howard Enders, chief operating officer of The Estate Registry, said on his company's website. "It's about creating a frictionless path for your client's intentions to be honored to the full extent, and doing so with as little stress on the family as possible."

Your estate plan may simply need a tech upgrade. An online, cloud-based estate management service can offer additional protection from costly probate battles, unexpected tax liabilities and unseemly family fights with the following features:

Digital vaults: Store your documentation to provide easy access for updating and retrieval. Notification systems: Streamline alerting organizations about your passing. Distribution capabilities: Provide your heirs with their inheritance during probate.

According to The Estate Registry, these digital tools can add to the clarity, continuity and confidence that advisors already give estate planning clients.

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This article A Will Isn't Enough Anymore: How to Keep Million-Dollar Collectibles From Breaking Your Estate Plan originally appeared on Benzinga.com

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