Estate planning This is a hot topic...

[nick8086]

What to do with the cars...

 

You should pm me

 

Three years attorney fees.. ups and downs...

 

i am not an attorney.

Edited December 23, 2015 by nick8086 (see edit history)

[padgett]

Cars are easy: decide who you feel is most deserving & bequeath them. OTOH deciding who to invite to come with a shovel and brush...

[Guest AlCapone]

In today's world where everything is controlled by laws and legislation,you should seek legal advice before the shovel is needed. You should decide who will be the recipient of all your assets not just your car or vehicles. Plan now before the vulchers arrive! Wayne

[Paul Dobbin]

Al is correct.  If you don't have a plan, your State Government has one for you that fits all.  (It's different in every State)  You need to know what your State has in mind for you and make a better plan, BEFORE it's needed.  Wills, trusts, Separate Writings, Estate & Other Taxes & Titles are all things you should be aware of and be considerations in your plan.  I promise you, you can make a better plan than the free one your home State provides.

Get it written and compliant with your State's laws while you are in charge

Famous last words:  "My family will know what to do and can take care of everything".   (If only they were allowed to)

Paul (30 years in that business)

[poci1957]

There was a letter or article in the "Antique Automobile" a few issues ago on this topic, written by one of our own who said he was asked about advising a widow on disposing of her husbands collection of timepieces and parts (or something like that).  He said it was her husbands hobby and she was totally uneducated on the rarity or values of anything, and unfortunately she had already been "advised" by her husbands friends who managed to buy the valuable stuff cheap and leave her with the garage full of clutter to dispose of.  

 

It hit home with me since my dad left behind lots of antiques and collectables and a wife and children with varying ideas of collectability and value.  The writer suggested the only fair way to get full value and clear everything out is to have an auction with a company that is connected with collectors and can market it properly.  That is what we did and I was quite satisfied.  Unfortunately the auction company will require 25-30% of the take and that idea can rankle those of us that would like to claim full value, but that is only possible selling everything one at a time on Ebay or at swap meets--not likely to happen with heirs and will likely result in everything sitting and deteriorating until it ends up thrown away by the next heir later--if there is one.  We all need to face this realistically and actually Christmas with the relatives is a good time to broach the subject, Todd C          

[AC Fuhrman]

It is a tough topic for sure and unfortunatley I've lived it too. One thing is to make sure someone knows what you have, where it came from, how it works and what it may be worth money wise. "I had no idea Uncle Buck had all this stuff, we've never set foot in the barn." There are always vultures to be sure but you can limit their influence if you make arrangements in advance. Maybe set up a special Administrator that just handles the 'collection?'

 

-OR-

 

Give it all away before you go - you'll have control over who gets it and you can enjoy watching them share your passion!

[60FlatTop]

In 2015 I took the initiative to reduce the garage full of clutter. Most of it sold online. I kept track of the sales and cost of sales. Shipping costs were included in the total sale and added to fees for selling services. My cost to sell a large bunch of stuff was 38% not counting my time to sort, photograph, list, ship, and follow up in any manner. I would value those efforts at another 25% AT LEAST. Some things I just threw away to avoid an ignorant or stupid buyer (there is a difference).

 

The stuff I sold in 2015 could potentially leave my widow with 10 to 15% of the market value if sold posthumously in 2055. (Approximate exit time with current medical technologies). Cars could have a greater margin, but I can see them being a PIA. My cars have a "living" and a "dead" price. She knows who will take one or sell them. And the extras can freely be given to friends whom would like a memento or need a tool.

 

I have seen automotive inheritances. They tend to be more of a curse than an asset. If not a full blown curse, at least a large liability. I remember a friend who inherited and Rolls-Royce Silver Shadow from a well meaning friend. . Little used with much deferred maintenance, the guy ended up with a case of the blind stutters when it needed a starter rebuild. The widow was offended and I think he was socially ostracized.

 

Another person died with a small collection of cars and left his poor wife with inflated values. After 6 or 7 years I have just seen a realistic price on one, but still advertised.

 

My stuff identifies me. I once had a local public display. The sign read "Things I saved that were too good to throw away". That pretty much sums it up. It's a part of me and when I'm gone it can go too. Until then I'll personally cash out the value.

 

And the stuff I sold in 2015; I could have thrown it away and enjoyed the extra space just as much.

Bernie

[trimacar]

A local gentleman collector  passed away, left about a dozen collector cars, and his son in law (owner of a new car dealership) was given the task of disposing of the cars.  The collector had basically told the family over and over what the cars were "worth", which in most cases was at least twice market value.  This set up a situation where the son in law, listening to offers on the cars and not knowing any more about them than the values mentioned by his late father in law, got very agitated at what he thought were low ball offers.

 

Won't go into further details, but one such car, a nice open Classic, he said it was worth X, I offered him a little over half X, the market value of the car.  Angry at me he was, so he sent it to an auction 1000 miles away, and  It brought a little over the half X I'd offered, with transportation and auction fees, he lost money not taking my offer.

 

So, be truthful with family, and the best thing is to list assets and put a range of values.

 

Also, any supporting documentation for the cost basis should be put with these values, I don't know if cars are like some things where the basis is the value at the time of owner's death.

[60FlatTop]

David's story is pretty close to reality. The prices she has for my cars is about 40% or less of what you'd have to pay me.

 

I haven't given her a price on the Alley Cat yet, but if my son can scoop out a 6 foot deep hole it will pretty much pay for itself..... and more.

Edited December 23, 2015 by 60FlatTop (see edit history)

[CharlieF]

I have told my family to look at the insured value on the cars, understanding that some of them are significantly over inflated by the insurance company increasing them annually.  Then try to market them at 65% of insured value but don't let any one get out of your sight that has 50% in his hands.  Sell them while they are still running even if it means going to the nearby annual auction.  Almost everything else in the car barn is junk as far as they are concerned.

 

I like David's idea of making a value list with a range of values.  Some day I may get around to doing that - just like someday I may do a bunch of other things.

[Phillip Cole]

I start a file on each car from the date of purchase. That way we know what I've got in it. It also has insurance and tax values in it.

The value range is a good idea. I'm definitely going to put that at the top of the file.

Also, I'll put a note on the tax value. Wouldn't want them to sell them for five cents on the dollar!

[Grimy]

I am neither an attorney nor a tax professional, but this is my understanding; be sure to ask your attorney or tax professional.

 

If your cars are in both your name and your spouse's name (joint ownership), when one of you dies each vehicle is upgraded, for Federal (and for community-property-state) tax purposes, to its value at the time of death.  For example, if you bought a vehicle for $2,000 30 years ago and it is now worth $30,000, upon sale by the surviving spouse for $30,000 there is no capital gains tax (28% Federal on collectibles, I believe) due.  Be sure to instruct your spouse to have each vehicle appraised for its value **as of the date of your death**.  This is similar to jointly-owned real estate.  The last thing we want is to have our heirs stuck with a huge tax bill when they sell our greatly-appreciated vehicles.

 

If you and a friend jointly own a 1928 Whatzit, I believe that **the decedent's share** (whether 50% or other proportion) is similarly upgraded for tax purposes to its value at the time of death.

 

As to appraisals, I see four types with widely differing results:

 

1.  An "estate appraisal," which tends to be low so as not to trigger inheritance tax. The downside is that if the estate appraisal comes in at $22,000 and your spouse sells it for $30,000, there is capital gains tax due on $8,000.

 

2.  An "insurance appraisal," which tends to be unrealistically high.

 

3.  An "auction appraisal," usually a range, is often optimistic.  Look at auction-house pre-sale estimates vs. actual hammer price, then deduct about 10% for seller's commission and expenses.

 

4.  A "fair market value" (FMV) appraisal, for an arm's-length transaction between unrelated individuals.

Edited December 24, 2015 by Grimy (see edit history)

[60FlatTop]

Now I lay me down to sleep,

 a garage full of stuff I dared to keep.

If I should die before I wake,

Unload it! It’s a small percentage of the estate.

 

Bernie

[keiser31]

I plan on giving each one of my two children a 1931 Dodge Brothers business coupe when my time is up. I pity the person who has to go through all of my other "assets". If my children do not want the cars, they can do with them whatever they want. I won't care anymore.

[Grimy]

One of my cars came from a four-collector-car estate, in which one of the vehicles (not the one I bought) represented 70% of the total value of the four cars--about $500,000.  The cars were all well-bought years ago, and were jointly owned.  The widow feared the potential cap gains.  I suggested what I posted above, and she ran it by her attorney and tax advisor who confirmed it (this was ten years ago).  A Fair Market Value appraisal was done on all four cars by the same appraiser, and the widow paid not a nickel in cap gains tax.  An additional benefit is that the widow did not need to save restoration receipts to increase her "basis" in the cars.

[trimacar]

From what I read on the Internet, and we all know it has to be true, regardless of joint ownership, the value of a collectable that's inherited is at a basis as of  the day it's inherited.

 

If that's the case, then in your "If I'm Gone, Please Open This" envelope should be the name of an appraiser who can put an accurate value on the cars.  My problems with a lot of appraisers is that the first question they ask is "what do you want the value to be?", which defeats the whole purpose of the appraisal in the case of an inheritance.  So, do your homework.

 

Otherwise, as a collectable, you or your heirs pay 28% tax on any profit from the sale.  Good records are very valuable, although I'm sorry to say my records aren't good on cars bought "right" n the 80's, but I'm working on documentation....

[Grimy]

David, let me clarify (again, as I understand it and I'll welcome a more authoritative source):

 

Scenario 1:  Bill and Hillary Schmidlap, a married couple, own a 1966 Mustang they've had for years that's titled in both their names.  Bill dies and the title passes to Hillary automatically and without tax consequences.  If Hillary subsequently dies **while still owning the car**, the car's value is indeed stepped up for tax purposes to its current FMV at the time of the second spouse's death.  If the total estate is below the threshold (about $5.8M today--and that's why I'm calling them The Schmidlaps), the **estate** pays no taxes on the value of the Mustang.  Heirs don't pay taxes; the estate does, if the threshold is exceeded.  The Schmidlaps' only child Chelsea, who inherited everything (a likely story!), can sell the car for FMV and pay NO capital gains taxes.

 

Scenario 2:  BUT.....**If Hillary sells the car during HER lifetime** she must pay capital gains taxes on the total appreciation during their ownership--UNLESS she had the car appraised as of the date of Bill's death, which amount then becomes the new basis.  To figure that tax, she must have records of the purchase price, "improvements" such as new paint, rechroming, a new top (all of which comprise the "basis"), but NOT ordinary usage expenses like tires, brakes, registration, and tune-ups.  She, or her battery of accountants, must collect those records and add them up, then subtract that from the net sale proceeds to arrive at the NET GAIN.

 

Having the appraisal done as of the first spouse's death eliminates the need to maintain cost records before that date.

 

State taxation details largely depend on whether your state is a community property state.  In California, the rate is 9.3%, so the combined Federal + Calif cap gains rate is 37.3%, a chunk large enough that it pays us to do our homework "in advance of need."

 

The principle is the same as for real estate and stocks.  BUT don't take my word for it, check with your friendly tax advisor.

 

And on this unpleasant-to-contemplate note, let me wish everyone a very Merry Christmas and a Happy New Year!

[trimacar]

Yes, I agree..I did not word it very well I guess, but that's what I meant....if your spouse dies and the car is not in your name, but you inherit it, then the basis for car's value is at the appraised value at time of death....

 

Agreed too it's a little sad to be discussing at Christmas time, but we all should be making plans, otherwise a mess can ensue.....

 

And to all a good night!

[John348]

Interesting topic, sort of depressing also. I think many of these laws can vary from state to state, and every family situation is different. In my case I have 8 cars and my case I think they are the easiest part to liquidate, Cars that are finished and driving will be easier to sell, it is the unfinished projects are the ones that will end up getting pennies on the dollar when an estate needs to be settled, especially if the property has to be (and in most situations) sold where everything is stored. If I pass before my wife, my wife knows what to do and who to call but it is the accumulation of parts that might appear to be junk to everyone else that will get tossed. I was very fortunate that when my father passed that i was an only child.

He had a few cars, but most of his focus were antique toys about 10,000 pieces that I never had and interest in. I was fortunate that I did not have any brothers or sisters breathing down my throat to sell everything to get their share. So I have been learning and researching as i slowly have been selling it off. To be honest it would have been easier for me if my Dad had invested in General Electric rather then antiques, but it made him happy. 

[nick8086]

Plan for this:

 

 

alzheimer's

 

dementia

 

 

This is what happen to me...

 

 

Mom would ask if I would return the truck.. It was parked in front of my house and we standing in front of it...

 

Then:

 

She asked if the truck was in the garage...

 

 

It is not hard to miss it . from the pic..

Edited December 26, 2015 by nick8086 (see edit history)

[JFranklin]

If I buy a part I tag it with the price for future reference, this may solve some problems on disposal. 

[John348]

If I buy a part I tag it with the price for future reference, this may solve some problems on disposal. 

 

My dad did that with every toy he purchased, I only found out that many were worth much less today. Toys he purchased 30 years ago few several hundred dollars were not even worth 1/2 that.

But true it is/was a helpful reference. I think the application might even be a bigger help down the road

[scott12180]

This has probably been said, so apologies for repeating, but the best advice is simply to give your stuff away once you get to the point where you can't enjoy it anymore. The reason is that while you are alive, you can do whatever you want with your cars and money.  Once you are dead, it can become a huge battle ground of contested wills and hurt feelings and burdens for those you leave behind.

 

I was associated with a start-up museum where the founder left  his cars and so-much money to endow the museum.  Sounds simple, but even before he died unknown relatives came out of the woodwork to try to get their paws on Uncle Tim's money.  And after he died came the contesting of the will.  It took two years in the courts to sort it out, and the attorneys took a huge portion of the money.

 

Give it away while you are still alive.  You enjoyed it for all these years, now enjoy the satisfaction of helping a young fellow by giving him a car or parts or tools and being around for a while to also give advice and fellowship.

[trimacar]

It's always interesting to me that money can come before family in a lot of cases.  There are some well known examples of this taking place in the car collecting world. 

 

My plan is to slowly divest myself of the collection as the years go by.  As we all know, the best laid plans of mice and men aft gang aglay, so will also take other measures, since we don't always live as long nor as alert as we'd like.....

[junkyardjeff]

I need to figure out what I will do with my vehicles,most of mine are really not worth much but if I know serious health problems are on the way I will start distributing them in the family and leave the daily driver s for anyone to fight over.

[JFranklin]

It is easy to advise divestiture before the end but the end may not be forewarned. Planning is still warranted, I have sold off some items I know will never be finished or duplicate spares, but there will always be some to sort out after.  

[Larry Schramm]

To help simplify my life I am in the process of selling/ scrapping/ giving away everything that does not pertain to my current collection of trucks & cars. 

 

I hope to get rid of a ton of parts, etc and let someone else find a use for it or enjoy it.  This is because there is so much that I do not use or will ever use I can not find things that I know I have.

 

Simplify, simplify, simplify.  Less stuff makes it easier on your mind. 

 

Just IMO.

 

[60FlatTop]

Four years ago my wife spent about $180,000 in medical insurance to keep me going just so she wouldn't get stuck with the stuff after I had a stroke and heart attack. It's amazing what people will do to avoid being trapped with an inheritance. I bet she'd do it again!

 

I could have bought a big old warehouse for that kind of money.

Bernie

[Restorer32]

Dad died in 1986 leaving a confusing and very disorganized estate, including a corporation checkbook that had not been reconciled in 15 years. Dad kept all the numbers in his head. I was executor. We had cars without titles and titles without cars. Dad had made a number of wills over the years with different lawyers. Of course the most recent prevailed. A previous lawyer contested the will, as he was cut out as executor, and managed to get himself appointed representative for any unborn potential grand children. Dad had left the bulk of the estate in trust for the 4 living grandchildren at that time. The case was finally thrown out but it took 6 years to settle the estate. I inherited a '35 Auburn Phaeton, Sister a '48 Continental Conv and brother a '28 Cadillac. All this hassle and there never was any disagreement or fighting among us siblings. Twas the lawyers that muddied the waters. My plan is to have all my cars sold or jointly owned before my demise.

[JFranklin]

I want to have it all divested and spent before my demise!!!!! No estate planning will be needed!

Edited December 28, 2015 by JFranklin (see edit history)

[John348]

I want to have it all divested and spent before my demise!!!!! No estate planning will be needed!

 

That plan only works if you have a crystal ball and know the future

[trimacar]

Yes, the best plan is to spend all your money having a great life, and the last check you write, just before you pass on, bounces...

[dibarlaw]

Dave :

I love the statement. I Just don't want to be the fellow you write that check to.

[Restorer32]

"To my heirs; being of sound mind and body, I spent it all."

[Restorer32]

Yes, the best plan is to spend all your money having a great life, and the last check you write, just before you pass on, bounces...

Dad, being quite the miser, upon learning that he had a terminal condition, replaced the furnace and water heater and resided and insulated the house and financed all the work,in his name only, in spite of his life long refusal to finance anything. It was only after his death that Mom realized he had purchased credit life insurance on all the purchases and had made minimum payments on the balances.

[Paul Dobbin]

All great schemes, but remember the estate laws can be different in all 50 states.

Having a plan that complies with your states laws is the challenge.  Good intentions and neat sounding schemes are only the beginning.  They do no good unless you make them legally binding on executors, heirs, beneficiaries, and the lawyers.  All these plans have to be legal in your state of residence/demise.  If not, the arguing begins and the estate settlement decisions can be left to the state and the lawyers.

Here is a good read to get you started:  https://www.estateplanning.com/What-is-Estate-Planning/

[60FlatTop]

My Father died in February 1978. On February 15th, 2015 I got $90 for the wheel covers he took off his 1970 Galaxie 500 when he bought it new. He liked the 1966 wheelcovers better.

I guess death and estates are kind of a casual thing in our family.

 

When my kids were High School age I told them "You don't need to worry about inheriting my money. Just pay attention and see how I got it. Then get your own."

Bernie

[old car fan]

does it not have to be in trust fund,to keep it out of probate?

Edited December 29, 2015 by old car fan (see edit history)

[Paul Dobbin]

does it not have to be in trust fund,to keep it out of probate?

 No it does not.  Joint ownership with right of survival beats Probate in many states.  That's why there is no single answer for all all plans.

 Look up the Probate rules in your county & state.  With the Internet there is a wealth of state specific information you need before you

 see a lawyer or planner.

[Larry Schramm]

Is it not true that generally all assets transfer to the surviving spouse without any tax implications? 

 

And it is only after the death of the surviving spouse the tax bill would come due?

Edited December 30, 2015 by Larry Schramm (see edit history)