Written on December 11, 2012 – 7:00 am | by Steven Frye
Recently, I was at session on the valuation of wine collections for estate planning purposes. I wanted to learn more about a personal asset, if I may call it that, which many of us appear to have more and more of but perhaps not sure what to do with it for estate planning purposes. What I learnt was that while there are some specific issues to wine collections that must be considered, most of it is common sense and applicable to valuation scenarios involving most personal assets in estate planning scenarios.
Many of us collect wines for consumption in the next few months and for “cellaring” (I use a wine fridge) to consume over the next few years (or decade) as recommended by the experts to experience all the flavors certain wines can offer. Do these collections really have value? According to the experts, probably not. Most collections are not sufficient enough or not unique in character to warrant a valuation.
However, if you are a serious investor of wines, buying highly valued wines for resale or accumulating certain varietals or vintages for instance and taking the bet so to speak that they will become high value wines in the future, then you may have a collection which may require valuation.
While the purchase and sale of wines take place in a controlled or restricted marketplace in many jurisdictions, most transactions take place at public or private auctions. Attend a few of those or speak to people who do and you will determine what is of value and what isn’t.
Depending on valuations and the interest your beneficiaries may or may not have in the collection, donating your collection or portions thereof might be a very good alternative to your estate having to foot a tax bill on assets it does not want or perceive the value in.
So before you set about to value your wine collection (or any other personal asset) for estate planning purposes, have someone who knows (a wine agent for instance in the case of wine collections) to tell you whether or not you really have something of value and then examine your options including talking to your beneficiaries before embarking on a full valuation for estate planning purposes.