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More Than 40 Years Of Legal Service To The Baton Rouge Region

Proper valuation of collectibles important for estate plan

On Behalf of | Jun 13, 2018 | Estate Planning |

Baton Rouge Legal Blog

People who are considering estate planning in Louisiana should think not only about financial and real estate assets but collectibles and other assets as well. The Internal Revenue Service defines the term collectible to include works of art, antiques, precious metals and gems, rugs and other things that people might collect. The IRS has the power to make the determination whether a particular item is a collectible.

There are two ways, generally speaking, that a person might plan to distribute collectibles on his or her death. Someone might give the collectibles to charity or leave them to his or her heirs. If a collectible item is not specifically distributed via the estate plan, it may be liquidated, so its value can be distributed among the heirs. Families sometimes have disputes due to differing opinions as to the value of a particular collectible or collection of assets.

There are special estate and tax laws that apply to collectibles. If the parties involved are ignorant of these laws, heirs may end up paying more than they have to in capital gains taxes. The estate could face tax penalties as well.

A valuation by an expert appraiser is sometimes necessary to meet the requirements of estate tax and income tax laws. Appraising the relevant item as of the date the person died establishes a tax basis that the heir takes as the basis going forward.

When collectible assets are held for a year or longer by a person who is not a dealer in those assets, the long-term capital gains tax rate will apply when the asset is disposed of. In a case where a person wants to set up an estate plan to cover assets in Louisiana, an attorney may be able to help. An attorney with experience in estate planning law might examine the facts of the situation and design a plan to meet the client’s needs and goals.