Asset protection is not limited to preservation of investments and financial accounts. Art, antiques, classic cars, and other collectible items require asset protection tools and careful tax planning. Mismanagement of these tangible assets in estate planning may leave some items vulnerable to creditor claims, fail to protect an inheritance for future generations, or result in unnecessary taxes.
Underinsured. Specialty items should be covered with collectibles insurance. Do you own valuable coin,stamp, or artcollections? Standard homeowners’ policies typically offer inadequate coverage and a standard policy provides very low limits on select “jewelry, silverware, furs, and firearms,” according to Travelers Insurance. Classic car insurance? Antique cars that are not primary vehicles may be eligible for added coverage.
Inadequate documentation. Proper collection and storage of receipts from purchases, transfers, maintenance, and appraisals of tangible assets help create a clear history of value. This will help determine appropriate insurance coverage. Are these assets held in a trust, under a limited liability corporation, or within another strategic asset protection tool? Proof of these transfers helps protect from creditor and collection claims.
Poor tax planning. Having appropriate valuation documents also establishes whether the value of a tangible asset depreciated or appreciated. Be aware of the 28% tax rate for the sale of collectible.
In 2018, Barclays reported that high-net-worth individuals retain about 9% of their wealth in tangible assets. Each individual’s asset protection needs are unique. Whether someone works in a field where the possibility of a malpractice claim may develop and target their personal assets, like a dentist or physician, or a couple needs a prenuptial agreement to ensure assets are preserved in the event of divorce, every asset should be considered and planned for appropriately with the assistance of an asset protection attorney.