For some estates, wine, like other personal effects, can be just as, or even more valuable or personal than other personal items. Like other personal items, wine can be gifted and distributed to a named beneficiary or class of beneficiaries. And I suspect, like some personal effects, can end up being just as difficult to distribute even if of relatively low monetary value.
Wine collections can be different. In last months’ Canadian Lawyer Magazine, Warren Porter, owner of Iron Gate Private Wine Management, wrote about wine as a Liquid Asset. When a wine collector dies, the collection can be very valuable, and if the collection is not specifically dealt with in the Will, the issue becomes: how does an estate trustee realize this value for the beneficiaries? Since the government controls the “private sale” of alcohol, how do you sell the contents of a wine collection while remaining on the right side of the law? Porter discusses the options.
One option is to donate the collection (or a portion of it) to a charitable auction, and in Ontario, there is almost one such auction a month. To do this, an estate trustee contacts a charity and provides a list of the wines that may be donated by the estate. An appraiser (approved by the Canada Revenue Agency) values the wine, and if the estate trustee decides to donate the wine, the estate receives a tax receipt in the amount of the valuation, regardless of the amount for which the wine is sold.
If the estate trustee would rather realize the value of the wine, then the LCBO holds an annual fine wine auction at which, according to Porter, $3 to $4 million worth of the finest vintage wine is sold each year. The LCBO, however, can be selective, and is not obliged to take all (or any) wine from a collection for the auction. Another option is to conduct a private wine auction through a company such as Porter’s. This option can be complicated logistically, requiring the wine to be catalogued, appraised, photographed, transported, placed into lots, and stored in a temperature and humidity controlled, high-security vault.
Lesson Learned: Wine collections may in the end not be as “liquid” as first thought. Government regulation makes them difficult to realize and the asset can spoil. Know the options available for when this opportunity presents itself.
Until next time,