Estate Planning With Monuments and Heirlooms included

If an estate has $1,000,000 of cash and 2 heirs, each could expect to get $500,000 less their share of any fees and other costs. It is difficult to imagine a serious dispute or time pressure to resolve that estate.

Very few estates are like that.

Fungible matters.

Fungible means that one instance of a particular assets is like every other instance of it. For example one $100 bill is identical to any other. The money in bank accounts with one bank are worth the same as with another. Stocks and Bonds, too

The problems come up with non fungible investment assets

Due to security difference, one mortgage may be be worth less than another one for the same amount. Rental properties that produce the same rent might be otherwise dissimilar. Harder to bequeath them as if equal without a problem arising.

Then there are the real problems

These assets have at least one characteristic of these.

  1. They are indivisible
  2. Their market value is known only in a range. Auctions are funny that way.
  3. They are family monuments. Like a multi-generation family farm, the family home or recreation property, or a family business.
  4. They are heirlooms or collectibles
  5. Not every heir values them the same way. Some have emotional value enough to cause a dispute even if the dollar value is not a dominant factor.

In your planning what should you do about these?

More sensitive planning

First of all be sure you know and understand they are not fungible.

You could leave them to the heir group but then you have merely kicked the problem down the road. Likely there will be trading and buyout to make it work. If you don’t know how that will end up, you have not seen it in action. There will be disputes, often motivated by the spouses of your heirs. You really don’t know how the children get along until you see them trying trying to resolve a poorly executed estate plan.

If you know a particular heir covets a particular asset take the lead and address the issues while you are alive.

Personal property is often overlooked when planning

You know about the income taxes on the cottage appreciation, but do you know how other personal property is taxed at death.

Their are at least two other types to think about

Listed personal property, defined as :

A type of personal-use property. The principal difference between LPP includes all or any part of any interest in or any right to the following properties:

  • prints, etchings, drawings, paintings, sculptures, or other similar works of art
  • jewellery
  • rare folios, rare manuscripts, or rare books
  • stamps
  • coins

Other personal property 

This is a very wide category. Other collectibles, from autographed, game used, team jerseys, to antique or special cars. Many kinds of furniture will fit here. Your Wayne Gretzky rookie card Graded 10 has appreciated tremendously over the years. The gains are taxable as a capital gain.

You should know how a capital gain is calculated. 

It is the proceeds less the cost of disposal minus the adjusted cost base (ACB) of the item. Does anyone, especially your executor know the ACB? Probably you don’t either. The ACB is the cost of acquisition plus the cost of improvements since you bought it.

With listed personal property you could claim a loss if you had one. With other personal property you cannot.

You might know some of the cost amounts but not many. For convenience personal property is deemed to have an ACB of at least $1,000. That eliminates much of the problem but not all. What’s the ACB for your 1966 Chevy half-ton you have spent 5 years restoring? You would have trouble knowing that and it would be impossible for your executor.

Part of your planning job is to make the work of your executor easier.

The bits to take away

Your estate may be more complicated than you imagine. Try to provide information the others will need.

Be very careful of assets with emotional attachment.

Understand your idea of fair when assessing business and other valuable assets that are not fungible.

Here is an interesting article that addresses some easily forgotten asset problems. Be helpful.

Collectibles Present a Unique Challenge For Executors

“WOODIES IN THE COVE”


Help me please. If you have found this useful, please subscribe and forward it to others.


I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email to don@moneyfyi.com

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