Estate Planning for Artwork and Valuable Collectibles

Have you thought about whom you’d want to inherit your blue sapphire ring, the Rothko painting in your study, or your vintage baseball card collection? Even if you’ve added beneficiaries to your
accounts and created trusts to pass down your wealth, you may not have done any formal estate planning for your jewelry, artwork, and other valuable collectibles, also known as your tangible
personal property.

Only 44% of collectors had taken legal steps to leave their collections to their intended heirs, according to a 2023 survey by the insurance company Chubb. Checking this task off your list is relatively simple — in fact, it can even be fun. Here’s what we recommend doing and why.

Make Your List

Some items may come to mind immediately, but we also give our clients a checklist to help them create a comprehensive inventory. Often, people don’t realize that an item has value beyond the
sentimental, or that an Hermès bag they haven’t used in years has become a collectible.

Once you’ve created your list, your insurance specialist will review your coverage for these items. They’ll also help you update your list annually (or whenever you buy, sell, or give away a collectible).

Examine Your Insurance

While you may collect items primarily out of passion, the financial risks of underinsuring your collections may be significant. About 20% of ultra-high net worth individuals’ wealth is in luxury collectibles, according to Knight Frank’s 2024 Wealth Report. Compare the value of your collectibles to your coverage on existing policies. Homeowners insurance provides little to no coverage for
collectibles, so there may be items you need to insure as scheduled property if you haven’t already. Insurers may require appraisals to maintain or add coverage.

Review insurance requirements for the storage, transport, display, and handling of your collectibles. Further, you may need to update your documentation for each item, including photos, videos, and any evidence of their provenance.

Obtain Appraisals and Evaluate Coverage

While fine jewelry is often straightforward to appraise — precious gems and metals are easily valued — other items’ value is more subjective. Subjective value can be shockingly high if your item is the last piece someone needs to complete their collection. Other times an item may have lost significant value because it’s fallen out of fashion. In addition, the same item can legitimately have different valuations for insurance, tax, and collateral or liquidation purposes. Appraisals can also help identify hidden treasures. People have discovered that a portrait of their grandmother was painted by a famous artist, or that their grandfather’s watch is a multimillion-dollar Patek Phillipe. Appraisals and insurance do have a cost, and whether to appraise and insure any item is always up to you (assuming the item isn’t collateral for a loan).

Document Your Wishes

You may have promised your antique silverware to a beloved housekeeper — your children wouldn’t know what to do with it. (They might drop it off at the nearest thrift store!) In some families, these informal, spoken arrangements are sufficient.

Some people feel better leaving nothing to chance, and others know their heirs may have a conflict over items not left to a specific person in writing. In these cases, you might choose to document your wishes in your will or revocable trust. You can also use a side letter that accompanies your will. Will or trust instructions are more secure but require you to update
your estate plan with your attorney whenever your wishes change. A side letter is simpler; you can write it yourself and update it anytime.

Ask for Input

Ask your loved ones if any items are especially important to them. You might have no idea that your granddaughter admires your Swiss cuckoo clock and would still miss it years later if it went to someone else. Something else to consider is that a seemingly minor collection, like the souvenir mugs acquired on family vacations, can become more sentimentally valuable to your loved ones when you’re gone. Even items that aren’t monetarily valuable may be worth documenting and designating a chosen beneficiary.

Other times, you might learn that your intended heirs don’t want certain items despite their monetary value. About two in three people who inherited a collection weren’t interested in it, according to a 2017 survey of high-net-worth investors by UBS Investor Watch. In such cases, rather than burden your loved ones with the ongoing costs to store and insure your medieval art collection, you might consider placing it in a charitable trust. You’ll be able to enjoy your collection now and have it donated upon your passing. As with individuals, you’ll want to find a recipient that is willing and able to accept your collection.

Share Your Wishes

It can be rewarding to discuss the importance of your possessions with their intended recipients. These talks can be a time to reminisce and share lesser-known stories from your personal or family history. Further, if you don’t have these discussions with your heirs, they may not realize the value of the personal property you leave them. Many people have heard of Fabergé eggs, but fewer people could identify one. Even fewer know that Peter Carl Fabergé was responsible for the enameled clock with the intricate gold flowers that sits on your office desk.

Plan for the Best

Rather than leave things to chance, include your collectibles in your estate plan. Know what you have, how much it’s worth, and whom it’s important to. This way, you can properly insure and protect these items during your lifetime and make sure they find a good home.