Incorporate Today’s ‘Hot’ Collectibles in Your Estate Plans

Since spring 2020, the COVID-19 pandemic has brought dramatic changes to the collectible assets market.  Comic books, video games and sports cards have suddenly jumped in value, along with more traditional collectibles like fine art, coins and watches.  The drivers include nostalgia for one’s youth, stay-at-home lifestyles, and the deep human desire to collect things.

“Collectibles are a booming market and an asset class,” said Mark Salzburg, founder and chairman of Certified Collectibles Group. “Spurred by our Internet-driven economy, a broad range of collectibles, including coins, banknotes, comic books and trading cards, have become more accessible, liquid, fungible and high profile — as demonstrated by headlines in the Wall Street Journal, Forbes and other mainstream publications.”

Appraising your collection

If it’s been a few years since you last reviewed your estate plans, you should contact a professional to understand the current value of your collectibles. Otherwise, you run the risk of disposing high-value assets for a song. You might also touch off a court fight among your heirs because you conveyed your collectibles in an unfair manner.

A professional appraisal is very important for valuing your total estate, as well as updating your planning documents. A big jump in your collectible assets could make a significant difference in your net worth and affect your potential tax liabilities.

It’s also a good idea to engage a professional appraiser if you are thinking about buying or selling collectibles to avoid over-paying or selling at below-market values.  An appraiser can help you determine authenticity, current market prices and potential for appreciation (or depreciation) in the future. After all, you certainly don’t want to pay top dollar for a collection only to see the value plummet in the next few years.

You should also have your collectibles appraised regularly for insurance purposes.  In the event of a hurricane, fire, theft or other calamity, an appraisal documenting the current value is vital when filing a claim. Otherwise you could be losing out on thousands of dollars.

What’s hot today

If you have a collection of Pokeman cards or video games, don’t toss them out the door. A recent study by PriceCharting.com, found that the price of an average retro videogame has increased by 33 percent since March 2020 because so many people took up game collecting during the pandemic lockdowns. For example, Pokemon Emerald for Gameboy Advance increased 145 percent and Pokemon HeartGold for Nintendo DS increased 133 percent. “Videogame collecting became a very popular pandemic pastime” said PriceCharting owner JJ Hendricks.  “Game collecting is nostalgic, indoors, and isolated.”

SOURCE:https://www.prnewswire.com/news-releases/retro-video-game-values-increase-33-since-the-start-of-covid-lockdowns-301263836.html

Collections of vintage comic books and original comic book art have also climbed dramatically in value, based on recent auction sales. For example, Heritage Auctions sold a collection of high-grade collectible comics in June for $22.4 million, following a $16.5 million sale in April.

SOURCE:https://www.forbes.com/sites/robsalkowitz/2021/06/23/what-the-hell-is-going-on-in-the-collectible-comics-market/?sh=314f8df7307c

Sales prices of traditional collectibles like fine art, watches, jewelry and coins have also risen during the pandemic. So, if it’s been more than two years since your last appraisal of jewelry, artwork or coins, for instance, you should engage a professional for an evaluation of the current value.

Steps to consider

If you have a collection of assets you would like to include in your estate plans, here are six steps to consider.

1. Inventory your collection. Make a list of the artworks, coins, comic books or jewelry, and take photos of each item. If possible, track down your original purchase receipts and any other documentation provided by the seller, such as the provenance of a painting or sculpture.

2. Engage a professional appraiser to review your collection and provide a value on individual pieces or the entire group of assets.

3. Provide the appraisal to your estate planning advisor, along with current information on the value of traditional assets in your portfolio.

4. Be sure to consider the personal feelings of your heirs when planning to convey a valuable collection. For instance, one child or grandchild might have a strong sentimental connection for vintage comics or Pokeman games, while other heirs might prefer to receive an equivalent value in stocks or bonds.

5. Alternatively, you might want to sell your collection or some of the pieces at a time when values are high and allocate those funds to other categories. This could reduce the risk of a future downturn in collectible values. Timing the top of the market is extremely difficult, don’t be greedy!

6. Keep copies of the professional appraisal for your records. This will provide valuable documentation for your heirs, as well as your insurance company. 

Regardless of the nature of your collection, incorporating current market appraisals into your estate plans will go a long way to reducing potential conflicts among your heirs, so you can feel confident about your personal legacy.