This Blog was written by: Sally Lee, J.D.
In an old New York Times article, I read about Jackie Kennedy Onnasis’ personal effects being initially valued at $6 million and later sold at auction for $34.5 million. The IRS, no doubt, went after its share.
When I meet clients for estate planning, I often ask if they own something of significant worth that could be featured on “Antiques Roadshow”. Usually, the answer is “No”. Jewellery, prints and china collections are common, but it is uncommon to discover a personal effect of great monetary value. In one of my most recent client meetings, I met a woman whose ancestors were very faithful in passing down family memorabilia from centuries ago. None of the family treasures were ever appraised, but I gleaned from the conversation that there was, at the very least, a tremendous degree of sentimental and historical value to these items.
Personal properties do not have to be bequeathed of by a will, they can also be gifted by way of Testamentary Letter of Wishes, the pros and cons of which have been covered in this blog’s previous posts.
What a testator should know is that executors have an obligation to ensure that all estate assets are properly valued, which includes personal effects. The failure to do so could result in a reassessment by the Minister of Finance and financial penalties. So, if you have that “Antiques Roadshow” item, it may make practical and financial sense to gift it during your life time to your loved one(s) who will now have the opportunity to enjoy it. By doing so, you achieve the goal of passing it to the next generation and you also avoid the estate administration tax. Although, it should also be noted, that gifting personal property during one’s lifetime, will not avoid the inevitable capital gains tax applicable to any appreciation while it was owned.