3510 Brooklake Road, N.E. Brooks, Oregon 97303.
Question. What will happen to my collection when I'm gone? Will it just sit there? Will it go to a museum? Will it be sold at auction or will my heirs fight over it? Many people do not care to talk about these questions. It is almost taboo for an outsider to try to talk with many collectors about. There is the feeling with many that 'nothing is going to happen to me,' or, 'it will take care of itself,' or, 'we'll do it tomorrow.'
In truth, most collectors have spent a lifetime gathering for their enjoyment and it means very little to someone else, except for the dollars it represents.
Let's take a look at the many things to consider in handling a collection upon someone's demise.
Talk Time. Gather all of your immediate family around and discuss your collection. For what purpose did you put the collection together? To preserve some of the past! You just like old stuff! Invested for retirement! For your children's education, or maybe to donate to a museum.
What are your family's thoughts as to your collection? Will they carry on with it? Sell it, or just don't care? After discussing it a decision can be made, mutually, as to the disposition of your collection upon your demise.
Inventory. We recommend that you have a complete and up-to-date inventory of your collection to include date, description, serial number, condition, date of purchase, when and where purchased and for how much.
Many collectors probably have an item or two that they are storing for someone else. If you do, write it down, date it, and also give them a copy, stating that this particular item is theirs.
We know of one case where a man and wife had agreed that upon his death his entire collection of tractors, engines and toys was to be sold at auction. Sometime later he passed away. His widow then contacted an auction company and a date was set for the sale. The question was asked if there was anything in the collection that was not his. The answer was, 'No, he owned it all.' Six months of lead time was used, with the sale scheduled for a Saturday. On the Friday before, a cousin appeared and stated that he had a verbal agreement with the widow's husband that a particular tractor was to be his if death occurred. This situation was resolved peacefully, but it could have gotten very messy.
Remember: Verbal agreements won't hold up in court. Write it down.
Will. Have a will made out. You can leave instructions as to the disposition of your collection. What is to happen. Who is to handle it and when. By doing this, you will save your heirs a lot of grief trying to figure out what your desires were.
Living Trust. In conjunction with your will, you might want to set up a living trust. You would be trustee, with your heirs being the owners. Contact your attorney and accountant about this.
Establishing value. Maybe you have decided to donate your collection to a museum or give it to the kids. You will need to have it appraised. Don't, under any circumstances, have a relative or close friend do this! Hire a qualified appraiser. This will cost approximately $100.00 per day plus expenses. The laws have changed the last few years and a qualified person will know how to do the paperwork properly. This method also is better accepted at tax time.
Museums. If you are thinking of donating your collection to a museum, check it out first. Most museums can't handle more than a few items at a time as they don't have space for them or the necessary resources to restore and display very many items all at once. If you have decided to go this direction an appraisal will be needed.
Gifts to the kids. Do the kids really want it or are they just saying they do to make you happy? How can they divide it up? Do they have room for it? These are things that should be discussed during your roundtable with the family.
Putting the collection up for sale. Do you know where to advertise your collection so other collectors will know that you're having a sale? Is the collection too big to sell it all this way? Do you want to take the time to negotiate the prices on each item? It is very conceivable that it could take as long as two years to liquidate a portion of the collection and you will probably still have quite a few undesirable items left. In having a regular sale it is advisable to have the collection appraised. We recommend again using a qualified appraiser, not a friend or relative. There is always the chance that a friend or relative would set an artificial low value on an item with the thought in mind of buying that item at a lower price. Bear in mind that if you broker your collection and have someone else sell it for you, it might cost as much as 25%. All in all, this method has a lot of drawbacks.
Auction. Having an auction is probably the best way to liquidate a collection. The real choice items will bring top dollar and the just plain items will also be sold. In a very short time it will all be sold, cleaned up and gone and you will have your money. There are a couple of things to keep in mind when picking the correct auction company. First, try to choose a reputable auction company, one that specializes in your type of collection and that knows where to advertise. Talk with other people that have used them. Make sure that all agreements are in writing. Ask what your responsibilities are and what the auction company will do for you.
The going rate is usually between 12% and 20%. At the 20% rate the auction company should set up the sale, advertise it, pay for all expenses. You should have no obligation other than to furnish the merchandise.
The larger the sale, the less the commission should be. So this is negotiable between you and the auction company. It takes more time to set up and advertise an auction sale, but 99% of the time the owners are going to realize more gross dollars than if someone just came in and bought it.
The ideal lead time for an auction is about three months. The larger the sale the more time should be used.
If you wonder what will happen to your collection, now is the time to give it some thought. Perhaps what was a hobby has taken on new values. Why leave its future to someone else's judgement? Make a plan for your collection, whether you sell it and use the money for other purposes, leave it to the kids, or donate it as a piece of history for others to enjoy, you should have a plan to provide a future for your collection.
By opening the door to this subject, maybe this article will stimulate conversation on a topic that for the most part has been unapproachable for many.
(Jack Versteeg is the National President of the Early Day Gas Engine and Tractor Association, Inc. He is the owner of Appraisal Service and Pacific States Auctions.)