Preserving Value and Legacy for Collectors

Collecting is often a deeply personal pursuit. Whether fine art, rare watches, or celebrated wines, these items reflect taste, legacy, and identity. For ultra-high-net-worth individuals, collectibles can also represent significant financial value and complexity. For this reason, they should not be overlooked and deserve to be given the same strategic attention as any other asset class.

What should you do as a collector?

Do: Keep a Thorough Inventory

A well-maintained inventory is an essential part of any collection. At a minimum, an inventory should include a description of each item, the date of acquisition, purchase price, and provenance. Additional details like appraisals, condition reports, authentication documents, location, and photographs are also important. These records should support valuation and insurance while also helping heirs understand what they’re inheriting. Without them, even the most cherished pieces can become sources of confusion or conflict.

Do: Maintain Adequate Insurance

Standard homeowners’ policies rarely provide appropriate coverage for high-value collectibles. Protecting one’s investment from damage or loss is a key part of responsible ownership. While some homeowners’ policies include limited coverage, it’s often necessary to add a rider for valuable items or secure separate insurance through a specialty carrier.

Do: Plan for Succession and Legacy

Collectibles often carry both financial and emotional value, which can make estate planning more complicated. Unlike traditional assets, they’re typically illiquid, subject to higher capital gains tax rates, and can cause family conflict without a clear plan. Start by thinking about who should inherit the collection and whether they want it.

From a planning perspective, gifting during life can reduce estate size, but the recipient inherits your basis. For low-basis, high-value items, holding until death may be better to allow for a step-up in basis. Trust structures like tangible personal property or revocable trusts can help avoid probate, maintain privacy, and ensure a smoother transition.

Don’t: Assume Heirs Will Want It

Sentimental value doesn’t always translate. Be realistic about whether family members will want to keep, sell, or donate the collection. Open conversations can prevent future misunderstandings. Avoid informal transfers or undocumented gifts, as these can trigger tax consequences and complicate estate administration. Instead, gifting strategies should be coordinated with legal and tax advisors to align with an overarching plan. If heirs are uninterested or unprepared, charitable donations, museum bequests, or sale strategies may better preserve one’s intent and values.

Don’t: Delay Structuring or Storage Decisions

Waiting to address ownership or transfer can lead to rushed decisions, higher taxes, or legal disputes. Early planning leads to smoother transitions and better outcomes. Improper storage can also damage delicate items. Use climate-controlled environments and professional storage when needed to preserve condition and value.

Don’t: Overlook Tax and Liquidity Implications

Collectibles are currently taxed at a maximum federal capital gains rate of 28% and a seller may also be subject to the Net Investment Income Tax. Before selling or gifting, consult a tax advisor to avoid surprises. Also keep in mind that estate taxes are due within nine months of death, and collectibles are often illiquid. Consider life insurance or other offsetting assets to help cover taxes and avoid forced sales.

Collecting is an art, but preserving a collection’s value is a discipline. With thoughtful planning, wealthy families can help ensure their collections remain sources of joy and legacy, not complexity.