ESTATE PLANNING FOR A PHILATELIC COLLECTION|
“We are only the temporary custodians of our philatelic gems.”
© Philatelic Specialists Society of Canada 2007
Click for PDF version
A. Advance planning for the disposal of your collection, essential for several reasonsConsider these facts:
• An organized collection makes it clear what you own and thus what is required to fill the gaps, should you continue collecting.What are the steps to ESTATE PLANNING FOR PHILATELIC COLLECTION?
The following check list is provided as a guide for Estate Planning:
1. Get organized and stay organized1. GET ORGANIZED AND STAY ORGANIZED
Some of the nightmare stories that stamp dealers and auction houses have experienced:
• Lifetime accumulations of loose stamps and covers stuffed into thousands of envelopes, shoeboxes, tins, etc.Dealers and auctioneers have advised that when it comes to selling, a well-organized collection generates the best results. One auction house is quoted as saying: “If it arrives in shoe-boxes, it goes out that way.” Remember, dealers and auction houses are businesses. You cannot expect them to spend time organizing your material. They need to turn a profit and for them time is money. They would be required to spend more time to prepare a proper evaluation on your disorganised collection. Disorganized collections would simply be sorted into general lots. In both cases, your estate and in turn your heirs are the losers.
Some of the things dealers and auctioneers told us they prefer to handle:
• Intact exhibits - They tend to sell better than if they are broken up.If you have a valuation or a detailed inventory at least it is something that can be commented on, which is much better than nothing at all.
2. PREPARE AN INVENTORY
List the major parts of your collection:
List all your exhibits in detail . Include details such as titles of exhibits, identifying features of albums and stock books and where each is located. If you have a single frame or multi frame exhibit list each of the pages, and the items contained therein. Better still make a photocopy of the individual pages and list the values on each page then compile a summary, page by page.
Compile a value for items in albums, stock books and unmounted material of note. If you have items of particular worth, list these along with images of the items so that they cannot be overlooked or misidentified.
Also, do not forget to make an inventory of your philatelic library and your awards.
It is a sad fact that our heirs usually have little appreciation of our collection. Thus, an inventory of your collection will be an indispensable tool for your heirs and administrator.
3. PREPARE A REASONABLE VALUATION
An auctioneer told us of a serious collector who told his spouse that he spent very little on his collection. Therefore, when that specialist collector died, the spouse, thinking that the collection had “no value” sold it to a local collector for a fraction of its true worth. After all: "he told us that he never spent anything on his collection."
It is important to establish the true value of your collection and record it. If over-valued, your heirs will be disappointed when it is finally sold. They will think that they were taken advantage of. If under-valued, then you have done a disservice to your heirs. Your valuation must be kept up-to-date and needs to be revisited regularly. Realize that your idea of your collection's value might be outdated because the demand for your material has changed. Include a file containing expert certificates and receipts or proof of purchase for particularly valuable items. Some collectors write, in pencil, the amount they paid on such items as covers. (see note on valuations & taxes below)
The value of your collection is not market value. Remember that items you acquired at a fraction of catalogue will sell at the same kind of discount. Condition is the essential factor in stamp value. If you have acquired damaged or defective items, you are kidding yourself and your heirs if your collection is valued or insured at full catalogue. In making an inventory, list nominal catalogue, the discount value to replace with comparable material, and then a deeper discounted value, which might be realized at a forced sale. Any collector who stays current with auction realizations knows the difference between the prices for superb copies and the discount realizations for average or defective copies.
Finally, all this information should be kept with your other valuable papers so
that it is easily available when the time comes. Also, if you have thought it
best not to reveal to your spouse the true amount you spent on your collect,
consider placing your valuation in a sealed envelope with instructions as to
when it is to be opened.
• you know what you have
Stamp Club Sale – This maybe an appropriate venue to dispose of your less valuable material. Unless you expect a sizable return, it might be best simply to specify that the club keep any profits and use the funds for the benefit of the members.
Sale - If the collection is valuable, you may wish it sold instead of donated. You should prepare a list of dealers, auction houses or Specialists Societies and specify which of these should be offered certain parts of your collection. Remember stamp dealers and auction houses are business and will charge a fee.
• Selling to a dealer – This maybe the most convenient method of disposing of your collection. You should instruct your administrator to obtain at least two offers. Also caution the estate to ensure that the firms and/or individuals are financially sound. Be advised that not all dealers are reputable and that they should bear in mind the proverb “caveat Emptor.” However if you choose wisely the returns could be much more than what you thought possible.Speed of selling
• Fast – dealer or individual, outright purchase, likely this will yield a lesser price, but perhaps no fees.6. PREPARE INSTRUCTIONS FOR YOUR ADMINISTRATOR
If you embark on the disposal of the collection yourself, it would still be advisable to set down in written form your intentions, goals and objectives, both as guide to yourself as well as a backup document for the Estate Plan. This backup document will serve as an excellent guide, for your estate administrator, should any unforeseen circumstances arise.
Therefore as a backup measure it may be wise to utilize a copy of your disposal plan which could serve as instructions and guide.
The guide which you prepare either as a self help guide or as instructions for others should encompass the following:
• the location of your inventory listLeave clear instructions to your administrator and your heir regarding the valuations. Suggest that the disposal is a business transaction, and that the cheapest is not always the best. Suggest that they get two appraisals as well as two offers. You should prepare a short list of those you suggest could do this job because selecting consultants by neophytes and non-philatelists is very difficult.
7. CONSIDER THE TAX IMPLICATIONS OF THE SALE
The following is a brief summary, as to the possible impact on your collection of the taxes imposed by the relevant authorities. For further advice on this subject and the liability and/or impact the reader should retain the services of a specialist in this area.
You have possibly already been exposed to the impact of taxes on the Philatelic hobby, when you acquired items for your collection. The items which would have directly impacted your purchases were the recently (1991) imposed GST as well as local Sales Tax (Harmonized Tax) levied by most Canadian Provinces.
Also to be considered is the inclusion in your income of the possible Capital Gain on the disposition or deemed disposition of your philatelic collection.
When attempting to grasp the impact of taxation on your estate, consider that all of your assets are subject to taxation within certain boundaries, and that the liability for tax on your philatelic collection happens by virtue of a definition within the Income Tax Act referred to as Listed Personal Property, which specifies that :
"listed personal property" of a taxpayer means the taxpayer's personal-use property that is all or any portion of, or any interest in or right to, any print, etching, drawing, painting, sculpture, or other similar work of art,The purpose of enacting this definition within the legislation is to clarify the types of Personal Use Property which are to be impacted by specific rules related to inclusion within the tax base (varied from time to time but currently 50%), as well as specifying that the Losses from Listed Personal Property can only be applied to reduce the gains from Listed Personal Property.(a) jewellery,
The importance of recognizing these rules is to alert the philatelist to the need to track the cumulative costs of their collection. The reason for this tracking is to ensure that if there are gains realized on the dispositions during one's lifetime or deemed dispositions by an individual's executors; that there is a minimizing of the impact of taxation by the application of any losses. The losses could have been realized during one's lifetime and not have been applied, in which case they can be carried forward and applied by the estate. Similarly the cost of accumulating the collection is needed.
As was stated above, one should consult with professional advisers in order to fully appreciate the impact of this on one’s estate.
Estate Planning Committee:
Mr. Orville F. Osborne
We wish to express our thanks to the many stamp dealer and auctioneer members of the PSSC who contributed their experience to this document.
Copyright 2001-16, 2017 The Royal Philatelic Society of Canada
All images and research articles found on this site are for your own personal pleasure and enjoyment only.
Any other use, particularly for a commercial nature on other web sites or auction listings is strictly forbidden.