Part of owning a train collection is that you will have to decide what happens after you cannot care for it anymore. If you haven't started estate planning, now is the best time to do so.
Why do we perform Estate Planning?
Without an intentional estate plan, your property will be distributed by the courts based on Probate laws, which vary by state. In many states, the Probate laws dictate that your spouse and children will receive a share, which can cause unnecessary hardship if your spouse receives only a fraction of the estate. Furthermore, the courts will usually insist on controlling your minor children's inheritance until they come of age. Any assets you own will have to go through your State's Probate process before they can be distributed to your heirs. When a court decides how to distribute your estate, it can result in assets of the estate being tied up for months or years, especially if there are disputes between your heirs.
At the end of the day, your estate planning should focus on reducing the burden for your loved ones. The thought and time you put into organizing and dictating your estate will help move along the process, resulting in reduced legal fees and a smooth disposition of your estate according to your vision, not the court's.
What is Estate Planning?
Estate planning involves the creation of a “Will” or “Living Trust”, which will answer important questions about your vision for your estate, such as:
- How will your loved-ones be provided for?
- How will the assets of your estate be distributed?
- How will the proceeds of Life Insurance be distributed?
- Who will be the guardian for any minor children, and how their inheritance will be managed?
- How you will be taken care of if you become disabled or mentally incompetent?
- Who will be the executor, i.e. the person or institution responsible for carrying out the terms of your Will?
This should give you an idea what is involved. Yet ,this is not an exhaustive list, especially if you own a business or have members of your family with special needs or disabilities. To make sure you don't miss anything, we recommend you discuss your estate with a Lawyer.
Getting Started with Estate Planning
Here are some general recommendations for how to proceed with Estate Planning:
- Don't Procrastinate: Estate Planning can be intimidating and an uncomfortable topic. Many people procrastinate dealing with it until after it is too late, leaving the decision on how your estate should be handled to the courts. Don't leave your heirs in the lurch; take care of this important task now!
- Engage a Probate Lawyer: Working with a lawyer who is experienced in Estate Planning is critical. Although you can find websites that will help you prepare a rudimentary Will, we do not recommend this option. Probate law is complex. An expert can guide you through this process quickly and efficiently, saving you time and energy while avoiding pitfalls. Getting appropriate legal assistance with your Estate Planning will typically run between $150 and $1000 - this depends on the complexity of your estate, and lawyer's hourly rates vary enormously.
How does Estate Planning apply to my Trains?
You likely spent considerable money and time shopping for and caring for your trains. Nobody knows your collection like you do, and nobody is better equipped to determine the best way for your trains to be passed down to your heirs. Here are some of the key points you need to consider:
Do you want your trains to be used or sold?
Trainz got into the model train business because of our passion for the hobby and we understand if you don't want your hard work to be liquidated after it gets passed on. Consider the future of your collection. Look at the pros and cons of each decision, not just for yourself, but also for your intended heirs.
The two key questions to ask yourself here are:
- Excluding the value of your train collection, do your heirs have enough financial resources to thrive?
- Valuable trains belong in the hands of an enthusiast that understands the time and energy involved in caring for a model train collection. Do you have an heir who shares your passion for the hobby, and will cherish your collection?
If the answer to either of these questions is “no”, then your Will should include instructions to liquidate the collection. If you would like your inheritance to remain in the family, include proper instructions about caring for your collection and file your Inventory List with your Will.
Document your Vision for your Collection!
Regardless of whether you decide to liquidate the collection, it is imperative that you have an accurate inventory list of your collection and determine an accurate value for your trains. Unrealistic valuations can cause imbalances in the Will, and increase the likelihood of a dispute between your heirs.
Here are some recommendations for how to determine an accurate valuation and document your vision for your trains:
- Don't try to appraise your collection by yourself: We recommend against trying to appraise your trains yourself. There are many beginner mistakes and pitfalls to avoid when to trying to value a collection, including pricing based on the wrong variation, basing your valuation on a Pricing Guide Book or confusing retail value and wholesale value.
- Work with an expert: We suggest you seek valuation assistance from a Train Dealer who is experienced in buying collections just like yours and has a history of successfully assisting with Estate Planning and Estate Sales.
- Prepare an Inventory List: Preparing an accurate Inventory List is critical to estate planning, providing a legal description of your trains and a basis for valuing the collection.
- Invest in a Professional Valuation: While many dealers will provide you a quote if you are planning on selling your trains imminently, only a few dealers will value a collection free-of-charge when there is no immediate plan to sell. Assuming you have a good Inventory List, Trainz can provide a free valuation of your trains to assist with Estate Planning. If you have a large collection and cannot provide an Inventory List, for a refundable fee we can arrange to perform an inventory at your location.
- Determine the Selling Method: You are the best person to determine the method to sell your trains, so don't leave this decision to your heirs. Consider the various options for selling trains and decide how to sell them, for example, to a Train Dealer or via a Live Auction House. Assuming you decide to sell them to a dealer, decide whether you will seek a Cash Offer or sell them via a dealer's Consignment Service.
- Choose the Dealer ahead of time: If your heirs are forced to procure quotes and negotiate a sale during the stressful and emotional time following your passing, this will increase the risk of an unscrupulous Train Dealer taking advantage of your family's grief by undervaluing your collection. We recommend that you take time to ask some fellow collectors for their recommendation for a trustworthy train dealer. Engage with your chosen Train Dealer ahead of time to protect your heirs from this scenario.
- Leave Detailed Instructions: Instructions for liquidating your train collection should be detailed and accurate.
- Be sure to inform your family of your decision to sell through a Train Dealer.
- Include the dealer's details and contact information.
- Specify whether it will be an outright purchase or auction.
- Explain your reasoning for each decision and warn your loved ones where the process can go wrong!
- Document the valuation in the Will, to approximate what your heirs should receive for the collection. Although train prices change over time, a valuation from a Dealer should be in the right ballpark, even if a lot of time has passed,.
- If the Tran Dealer who determined the valuation is different from the Dealer who you selected to purchase the collection, document their identity in the Will in case your heirs are unable to come to terms with the Train Dealer you have selected.
Selling Tip #1: Even if you choose to auction your trains with a Train Dealer, select one that can afford to purchase your trains via an outright cash purchase. Financial stability is a decent indicator that you can trust a dealer with your collection.
Selling Tip #2: Local Live Auctioneers are seldom train experts, and often sell your trains in large, arbitrary lots, which can result in your heirs receiving much less for your collection than they should. A word of warning: your heirs may consider this option if you leave them without detailed instructions on how to liquidate your collection.
Taking Inventory
Your inventory helps everyone involved in handling your estate:
- Your Inventory List will be a document in the Will, and be part of the legal description of what is to be passed to your heirs.
- The Train Dealer will use the Inventory List to determine a valuation.
A current inventory List accelerates a sale and makes the inheritance process easier for everyone. Remember, don't procrastinate! There's no better time than today to start maintaining an inventory!
Here are our tips for developing and maintaining an Inventory List:
- Use a Template: When building an Inventory List, ensure to use a template such as the Trainz Inventory List Template. This will provide information on how to list your collection.
- Document the Condition of your trains: Our Inventory List Template provides guidelines on how to evaluate and document the condition of your train collection using the Train Collectors of America (TCA) Rating. This is important for determining an accurate valuation, especially when your trains are in above-average condition. Providing an accurate condition for all your trains can increase the amount of an offer from a Train Dealer. Dealers consider make/model, variation, condition, paint color, box condition, sound system, customization and more when they estimate the value of an item.
- Keep Digital and Hard Copies: We recommend that you develop the Inventory List in a digital format such as Microsoft Excel, so it can be easily maintained. Also file a hardcopy print-out of your Inventory List with your Will and save an additional copy in at least one other physical location.
- Take photographs: Photos of everything in the collection can go a long way when you are trying to sell your trains. A picture of an item next to its original packaging showing the model number will show a prospective buyer that you have taken care of the piece since you first purchased it. Don't worry about multiple angles of photos, just focus on making sure that every major item in the collection is photographed.
Estate Planning Checklist
Finally, for your convenience, we have provided below a checklist of our key recommendations for Estate Planning:
- Don't procrastinate
- Engage a Probate Lawyer
- Prepare an Inventory List
- Use an Inventory List template
- Document the condition of your trains
- Keep digital copies and hardcopies
- Take photographs
- Invest in a valuation by a professional Train Dealer
- Choose the dealer and selling method ahead of time
- Leave detailed instructions in the Will
We hope that this guide has been useful to you. Please feel free to Request a Quote or to Contact Us to provide feedback, good or bad, on this Estate Planning Guide.
Sincerely,
Your Trains Buying Team
