The “Art” Of Managing Collectibles in Your Financial Plan

When I think about financial planning and retirement income needs, I think stocks, bonds, Social Security, and pensions. The reality is, there’s often much more that goes into one’s net worth – perhaps it’s an art collection, or some important memorabilia, a classic car, or rare coins. These personal items can bring us joy, help define who we are and what we care about, and also become an important financial asset and component of overall wealth.  

There are complications to owning such assets though. Often times the owner of said items knows FAR more about them than anyone else. So, if you have said items, here’s a list of things to think about, and a check list to go through to be sure their role in your financial plan (and estate plan) is understood and properly accounted for, especially should someone else need to manage said assets in the future. 

• Do you have a catalogue of these assets? Unlike a stock or bond where there is a market value calculated daily, these rarer items are not considered a liquid asset with a clear market or value. In some cases, resale would take time to find buyers and negotiate deals. Having a catalogue of important information about the art/memorabilia/car, etc. would help determine a fair market value, if ever needed for the sake of a loan, sale, or estate settlement.  

• Has it ever been appraised? Appraisals from qualified experts can be very helpful too. If there is a means (depending on the item) we would suggest getting appraisals every few years or researching what comparable items sell for. Thorough and frequent research of the item will help keep a net worth report up to date but can also help ensure you properly insure said items. Be sure to talk to your insurance agent about an endorsement on a homeowner’s policy.  

• Is there documentation that proves the item to be authentic? Depending on the type of item, it would be important to have some documentation that proves what you have isn’t a cheap replica or “knock off.” Perhaps a letter of authentication came with the purchase of that Babe Ruthe baseball, or that special painting? If not, it might be worth trying to acquire that evidence and adding any documentation you can get to add to your catalogue for future use. 

• Make your wishes known. Just like naming a beneficiary on your retirement account so you are sure your hard-earned savings goes to the people you care most about, it’s important to document your wishes for special items in your Will. Let it be known if you view these special items as a family heirloom to be passed down to specific persons, or if the items are to be sold and proceeds disbursed.  

We’ve found that more and more of our clients have special items of significant worth in their possession. In many ways, these items help define who they are; a “car guy” or “avid baseball fan” or “an art lover.” The key is not to have an emotional loss compound into a financial one through the loss of the item due to some unfortunate event like theft, fire, or water damage. And don’t let the history and knowledge necessary to properly handle the items pass away with you when that time comes. It’s important to catalogue, appraise, and authenticate whenever possible, to ensure the financial aspect of its role in your life lives on beyond yourself and your family knows how to handle said items.  

Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice. 

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