Historical items can be valuable. This presentation-inscribed Colt Model 1861 New Model Navy Revolver, from the Colt Co. to E.W. Parsons of Adams Express Co., sold for $805,000 at a September 2011 auction.
This article was originally published by Heritage Auctioneers & Galleries, Inc., "Trusts & Estates Journal," Fall 2019, page 17.
Tell me if this story sounds familiar: Brian was a military history buff who gathered a carefully curated collection of books and artifacts over his lifetime. By the time Brian died, his collection was quite valuable. Brian named his daughter, Jessica, as the Executor under his Last Will and Testament. Jessica was the only of Brian's three children living nearby, had always been a devoted daughter, and had an MBA, so it only made sense for her to administer his estate. Unfortunately, Jessica did not share Brian's love of military history and, not knowing what she had on her hands, sold most of the collection to a local pawn shop for less than half of what it was worth. Brian's son, Jacob, who shared his father's affinity for the collection, was devastated when he heard what his sister had done. Not only was the estate depleted of valuable assets, Jacob was deprived of the opportunity to own these very meaningful items.
Selecting an Executor or Trustee
Naming an Executor (called a Personal Representative in some states) to administer your estate is an important decision, and can be a difficult one, particularly if you own property that requires special knowledge and attention, such as fine art and collectibles. Though sad, it is safe to say that most estate planners could tell a tale or two like Brian's. Often, the people we trust most to handle our affairs after death did not share all of our interests in life, and may not be the best choice to manage, sell, and distribute items that are precious and valuable. Conversely, those who share a common interest in collectibles may not be the best fit when it comes to handling the other financial and personal aspects of estate administration (not to mention that it can be quite a burden to place on someone who is not a close family member).
Many collectors are aware of the advantages of creating a revocable trust (sometimes called a "living trust") that disposes of their property at death. If properly created and funded during life, a revocable trust can essentially stand in place of a Will, and the Trustee(s) will be responsible for administering and distributing the assets in the trust. For that reason, the remainder of this article primarily uses the term "Trustee," but that may be read interchangeably with "Executor," unless otherwise specified. However, collectors face the same issues described above when selecting Trustee(s) to manage and distribute the property held in a revocable trust.
The Collectibles Trustee: Best of Both Worlds
How can you ensure that you have the right people in place to handle your collectibles and your other assets when you die? One possible option is to appoint Co-Executors or Co-Trustees. This allows you to fill those roles with people who have different skillsets and knowledge, and allows them to share the responsibilities involved. However, unless you specify otherwise in the Will or trust, they will be equally responsible for administering your assets, and each will have access to all of the available information regarding your personal and financial affairs.
Instead, consider appointing a "Collectibles Trustee" to manage, sell, and distribute your collectible items, and a "General Trustee" to handle your remaining affairs. The Collectibles Trustee is the person with the knowledge and ability to handle the collectibles, and is given the full authority to do so. All other matters fall to the General Trustee, and the Collectibles Trustee is not given any access to or authority to handle other assets. By appointing a Trustee for the specific purpose of managing your collectibles, you ensure that those important assets are managed with the attention and expertise they require, while placing your other assets and affairs in the most capable hands.
Naming Executors or Trustees with specific roles requires careful planning and there are several considerations that should be addressed. For example, the law in some states may not permit the division of duties and responsibility among different Executors or Trustees. If you call one of those states home, it may be necessary to create a trust governed by the law of a different state that expressly allows the appointment of an Executor or Trustee for a special purpose. It is also critical to ensure that the Will or trust clearly defines the authority of the Collectibles Trustee and the assets under that Trustee's control, without being so specific as to unintentionally exclude items you acquire after the document is signed. Additionally, with an increasing portion of our lives taking place online, it is important to ensure that the Collectibles Trustee will have access to any digital data relating to the collectibles, such as receipts, photos, and inventory lists. This may require a special provision granting authority and access to the Collectibles Trustee, in order to comply with state and federal laws regarding digital assets and records. Taking the time to educate the proposed Collectibles Trustee and the General Trustee about your collection and where and how you have stored information relating to the value and provenance of each piece is also a good idea.
Your estate planning attorney can advise you as to the law of your state, and all of the potential issues you should consider when appointing an Executor or Trustee. Appointing a Collectibles Trustee may require a bit more advance planning, but it can be well worth the effort if it protects the value and integrity of the items you cherish most.
President and Director of Content Development
Vanessa Kanaga joined InterActive Legal in 2013, and serves as President and Director of Content Development. In her role, Vanessa oversees the development of InterActive Legal program content, in addition to working with CEO, Michael L. Graham, to guide the company in its future direction, and manage day-to-day operations.
Vanessa received her J.D. from Cornell Law School, Magna Cum Laude, in 2006, and holds a B.A. in Philosophy from Wichita State University, with a minor in Music, as well as an Advanced Professional Certificate from New York University School of Law. Following law school, Vanessa practiced in New York for several years, at Milbank, Tweed, Hadley & McCloy, LLP, and then Moses & Singer, LLP. In 2012, she returned to her home town of Wichita, Kansas, where she was an associate attorney in the estate planning and probate practice group at Hinkle Law Firm, LLC, before joining InterActive Legal.