by Brian Picariello
Taking inventory is smart, yet we often put off examining what possessions we have, and what we intend to do with them, now or in the future. Since you are moving and about to pack up your belongings, you have a practical time to seize the inventory task by the horns.
There are financial planning-related reasons to inventory your possessions. Here are three:
Estate planning purposes. Are there items you own that you would prefer to keep in the family? Do these items have special meaning or significance to a relative or friend? Keep in mind that family squabbles can arise over chattel that holds sentimental value, not only over an item with financial value. So, as you conduct your inventory, make note of which possessions you would prefer to bequeath to whom. Next time you sit down with your trust and estates attorney, you can pass on that list and add those instructions to your will.
Insurance purposes. You have homeowners insurance, and you may even have some rider policies on jewelry, fine art or instruments. Are you certain the coverage you are about to transfer to your new home is sufficient? I find that the acquisition of valuables over time often outpaces a person remembering to insure against their loss or damage. Consider a scenario involving a vintage guitar collector, —even if you collect something else. Think about an executive for whom playing guitar is a hobby. This man appreciates fine, older instruments. While building a collection of rare pre-war acoustic guitars was never a plan, he just acquired them as he came across them. He bought insurance rider coverage for his first vintage guitar, and did so again for the second. However, he now has more than two dozen guitars, worth over a million dollars, and many of the instruments are rare and irreplaceable. Yet, beyond covering his original two guitars, he never got around to insuring the rest of his collection. Since the value of his guitars has risen each year, even his insured ones are now underinsured. Protect yourself against similar risk. Take the time to consider the value of your possessions and make sure your insurance coverage is adequate. Your precious, unique items are irreplaceable. If they are stolen or destroyed and you do not hold the correct insurance, you stand to suffer both the emotional loss of your collection and the loss of the money you invested in it.
Donations to a museum. Many times people think that some artwork or collection they have acquired over the years should find a good home in a museum, whether during their lifetime or after. In your master inventory list, consider a side list for such valuables. A bequest entails considerations for tax planning and estate planning. Once you have had your collection expertly appraised, sit down with your wealth manager, who should also be a CPA, to help make the tax-planning decisions on how and when it would be in your best interest to make the donation.