sensitive subject? Coin collecting and estate planning
moursund
Posts: 3,207 ✭✭✭✭✭
I'm executor of my father's estate, and will have to deal with filing form OR-706,
Oregon Estate Transfer Tax.
It turns out that Oregon gets 10% or more of everything after the first 1M of an estate, when an Oregon resident passes away.
It doesn't take much of a house plus a retirement plan to exceed $1M these days.
I'm thinking about my own estate, and what my heirs will do.
My coin collection is worth some significant thousands of dollars.
When I pass away (hopefully a few more decades) it could be worth much more.
I don't really like the idea of the government taking a big bite out of my estate, and I also want to be a law-abiding guy, and make things easy on my heirs, and not give extra work and money to lawyers.
What are good ways to deal with a valuable collection, in the context of estate planning?
Please do not post tax-evasion strategies involving anything illegal...
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Comments
I've read various strategies before on here and people will have their own opinions to share. For myself, it's very unlikely my son will be interested in coins when the time comes. So my plan has been to sell off everything somewhere between my mid 60s and 70s and establish a special needs trust for him. No need to burden my family with trying to sell off stuff anyway. I'll keep a few things to hand down but they'll be inexpensive.
Here’s one that was suggested. There’s one that was supposed to be better. This is fairly straight forward. eBay I think. Maybe $4-5
🎶 shout shout, let it all out 🎶
I would reach out to professionals because when my uncle passed away recently in NYC six months ago, it became my responsibility to do the needful since my aunt has Alzheimer's.
The amount of info can sometimes be very overwhelming and it was extremely beneficial in all aspects to retain the experience and expertise of an estate planning attorney along with a certified CPA knowledgeable in local tax laws because things can and do get slightly complicated if all the steps are not known or clear.
All the best.
https://www.pcgs.com/setregistry/u-s-coins/quarters/PCGS-2020-quarter-quest/album/247091
Choose to be a resident of another state. I believe only 12 states have estate tax. Amazingly enough, even California does not.
Or do like most old folks do in retirement and. MarkinDavis is suggesting, move 🤠
🎶 shout shout, let it all out 🎶
Kinda like where i am now... Corvallis is loverly.
Among other things, provide your heirs with information regarding ballpark valuations of your coins, so they have at least some idea what they’re dealing with. Perhaps even more importantly, you should arm them with contact information for trustworthy individuals and/or companies whom they should contact, before doing anything with the coins. If possible, include more than just one such contact, in case your first choice isn’t around or involved in the hobby at that time.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
One of the most important factors in our decision on where to retire was the estate/inheritance taxes. I despise giving money to the goobermint, especially when they did nothing to "EARN" it.
“In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
My digital cameo album 1950-64 Cameos - take a look!
One common technique to bypass estate taxes in the US is to give $15k annually to your children and separately to their spouses.
This $15k/$30k is exempted from their paying taxes on it.
https://www.actec.org/estate-planning/estate-gift-tax-exemption/
Already living in one of the nicest places to retire... might want to stay here:
The best way to deal with a coin collection in an estate setting is to have no coin collection to deal with. The same goes for other collectibles as well. Don't die with your collection. There is nothing dealers and auction houses like more than having the heirs walk in the door with that "all I want to do is get rid of this stuff fast for cash" look. Set an end date for your active collecting activity and sell everything when that time arrives. If you still like collecting, collect knowledge, not things.
If you have kids you can trust, gift it to them while you are still alive in small enough increments to avoid estate tax, and you can remain custodian of the coins until your death. Federally the annual gift tax exclusion is 15k. If you are married, I believe you and your wife can each give each person 15k/year. No idea how this works for Oregon.
We considered the Pacific Northwest ( specifically the San Juan Islands in Washington). Decided the taxes, rainy weather, natural disasters, were not for us. (politics were not a plus for us either). Note that I did not say "family", which is a major factor for many.
We ended up in Pinehurst, North Carolina - home of American Golf. Great climate, not tropical, close to the ocean when we want to visit and close to the mountains.
Bottom line is that everyone has their own set of criteria for a good retirement location. We are happy with our decision, I hope you are happy with yours.
“In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
My digital cameo album 1950-64 Cameos - take a look!
Well now. I think I get it. Watching Fred W. I’ll be doggone That’s what he did,isn’t it? I am going to say I have a lot of respect for him. Thanks for your post 🤠.
Brilliant. Why worry about what happens, take control.
🎶 shout shout, let it all out 🎶
Who is Fred W.?
Fred Weinberg . I hope I’m not misspelling or pronouncing it wrong.
The slabbed cricket gentleman
🎶 shout shout, let it all out 🎶
Why not make things even easier and not buy any coins or other collectibles in the first place?😉
More seriously, I understand your point. But most people don’t know when that time will come and far too many die at very young ages. So asking collectors to just stop collecting at a certain age might not end up being the desired solution, anyway. And either way, you might be asking too much of them. Shouldn’t they be able to collect as they wish during their lifetimes?
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Mr. Weinberg is probably the foremost expert on errors. The "slabbed cricket gentleman" is a bit demeaning.
Dang it JM. What is going on with you. Did you read my post. What more did you want me to say. I don’t know him very well but too insinuate that I’m some how disrespectful. Not today.
🎶 shout shout, let it all out 🎶
It just read as a little disrespectful. Fred is a legend.
One of your colleagues just did the same thing with his macerated collection.
I'm not sure this really addresses the estate issue as presented, however. Turning minimal estate transfer taxes into capital gains taxes isn't usually a win.
There is a very easy way that is not being mentioned.
Thank you for not mentioning it.
Find out whom in your family is interested in your collection. Draft estate planning docs accordingly.
For coins no one wants, link up with a dealer or organization you trust. Specify in estate planning docs he / she / it will handle sale of coins and disburse proceeds to heirs as specified in trust docs.
If you have a collection worth over 50K, pay to have an appraisal done. You will need this valuation to support the number listed on your Federal / State estate tax return.
Do not die in a state with an estate tax. A client just died, she is not required to file a Federal estate tax return, but is required to file one in Oregon: which means the Federal estate tax return must be prepared to attach as backup to the Oregon Form. Between legal and accounting fees, her estate will pay possibly $20K in legal and accounting fees. Add this to Oregon estate taxes. A portion of professional fees would have to be paid in any event, just to sort out her estate, but the rest would otherwise be unnecessary.
"Seu cabra da peste,
"Sou Mangueira......."
I have already done this myself. When I reached 65 I stopped collecting things, sold the vast majority of my collections and now only collect knowledge. No one in my family has any interest in coins.
Personally, I think transferring coins is a mistake if you have multiple heirs. The resulting split could be viewed as inequitable and result in squabbles. Better to have it all sold and split the money. Any heir who wants can bid for the coins they want.
@jmlanzaf should reply: "Don't mention it".
A punchline is a terrible thing to waste
Which is more important? Living somewhere that makes you happy, or your heirs having to pay some tax decades from now. The older (I mean wiser) I get, the answer to this gets more and more obvious.
The cleanest (and most profitable, even if tax is more) answer is not to leave much numismatic value in your estate, but since you presumably collected things that you like, why not keep them while you are still around to enjoy them? It is a personal tradeoff.
Plan A is to enjoy it for many more years and then sell on my terms, on my timeline, at a point where I think the market is reasonably strong.
Plan B is the document that sits in the SDB with detailed instructions on how to liquidate the collection and get good rates of return while doing so. There are several trusted dealers listed, and also instructions on how to negotiate a favorable liquidation via auction. There's a detailed inventory sheet and copies of 95% of the original purchase receipts to document my cost basis. I recently updated everything, so it's hopefully good for a while.
One snag...... when my wife sees what I paid, she might have a sudden MI and join me before she can even enjoy it.
I talked with my daughter about what she would do with my coins when my time comes. She quickly informed me that she intends to keep them.
I suppose another option, if your heirs do not appreciate the collection, is to donate it to a worthy charity. Of course the charity would have to auction it off or what have you.
My coin collection met a terrible end in a boating accident last fall. My guns were lost as well.. bummer.
I remember. Terrible accident. Nearly lost your life, if I remember 😉
🎶 shout shout, let it all out 🎶
Skeet-shooting Ikes?
You. An always look into a trust, be it for your coins or other parts of the estate for decreasing the overall value.
@moursund buy a rental property/vacation home in Florida to become state resident. No estate tax or state income tax.
Responding from home: Specify which heirs have first pics, then second, etc. The wife is first, immediate family members next as specified. Shouldn't be any squabbles. And if there are, I'm dead anyway, so it's not my problem.
Actually, mine is better. It is more subtle and nuanced.
In theory, that works fine. I know of two estates that ended up causing an irreparable breach between siblings.
I agree with the unmentionable..... Prior planning prevents piss poor performance.
Cheers, RickO
I like that idea
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Bad transactions with : nobody to date
What coin collection?
Upon sale of an asset capital gains taxes become due and they are calculated using the basis (cost) of the asset. The basis of an inherited asset becomes its fair market value at the time of the owner's death. This new basis replaces the original basis of the asset that was based on the owner's cost and normally, due to inflation, results in less profit and lower taxes. Most commonly, fair market value is determined by an appraisal but there are other methods.
This means that if an inherited asset is sold shortly after inheritance and sold for fair market value, there should be little to no capital gains taxes due because there was little to no capital gain realized because of the newly assigned basis.
It also means that there may be tax advantages if the inheriting party sells the asset after inheritance rather than the estate selling the asset (using the original cost basis) and then passing on the proceeds to the heir(s). Always consult a tax professional for advice.
Repetition of ignorance is ignorance raised to the power two.
derryB
yours is the smartest advice of all of the above!!!
except, it is at the time of death, not inheritance. can be a huge difference in some circumstances.
The decedent's state of record is the taxing authority of the estate. It's too late for him to move.
And don't forget, there are federal tax forms and taxes with an estate and inheritances.
Repetition of ignorance is ignorance raised to the power two.
corrected, thanks
Repetition of ignorance is ignorance raised to the power two.
Like others have mentioned on here - an irrevocable trust fund plus relocation to Texas with no state tax was suggested to my aunt and has been set in place thereby no one (including hospitals and nursing homes etc.) can touch those funds because of the Alzheimer's.
https://www.aarp.org/money/taxes/info-2020/states-without-an-income-tax.html
Edited to add link
https://www.pcgs.com/setregistry/u-s-coins/quarters/PCGS-2020-quarter-quest/album/247091
No harm/no foul - I'll be glad to answer to the 'Cricket Guy' for
the rest of the month -
And yes, what Mark F. and others said, is what I'm doing -
Going over my Mother's Trust three years ago (she passed away at 96,
still working at the same job she had during WWII) I realized how
organized her Trust was, and how little 'work' had to be done to get
it organized for sales, etc. It made me realize what a mess my friends
and family would have trying to close my office, liquidate my personal
and company inventory, etc.
That really started my change in thinking, and then a few other factors
came into play in the past two years, and I came to the disci son to
retire - so with Heritage's incredibly competent crew and staff in both
BH and Dallas, I'm selling into a pretty good market, and my 'heirs' and
good friends won't have anything to do liquidating my coins and collectables
when I go in (hopefully) 15-20 years from now.
Although I'm kicking and screaming about throwing this or that away,
or getting rid of (eBay, Heritage, etc.) that or this, I can see that I'm
glad to be doing it NOW, instead of 10 or 15 years from now (and who
wants to wait for the next good market in 8-10 years?)
I buy plenty of deals of normal coins from survivors (spouse or children)
and it can be overwhelming for them sometimes. I know I'm not imposing
a burden on my friends and family in the future......
But having to move to Texas is like dying twice...