How to advise on the sale of a collection?

[davidd]

Part A

I would inform the widow that for bikes you may only be able to realize 75% of the now market value. This is because costs, particularly at the big auctions, can eat up the proceeds, but there is a chance that sales price may be high enough to justify the high costs.

Ebay is not a bad option with a popular machine. There is a big audience. The cost of shipping and lodging are gone and there is no premium involved. Buyers can back out of either, but there are fewer costs if you are selling from home.

I would say that any parts are worth 25% to 50% of retail, but again you can hope to earn more. It takes the same amount of work to sell a foot peg as a whole bike, which is an over blown statement, but you will not feel that it is over blown if you are trying to sell 200 items. It is a lot of work. It might be best to sell them as a lot. You could also consider giving them to someone who is going to one of the rallies and will sell them in exchange for a few items. The value of parts is based on need and so it varies wildly from person to person. The big items are good, UFM, RFM, Forks and cases, but the small items are tough. If you have to mail each part to a different person that can become tedious. If you advertise in MPH or Ebay I might try and group the parts for shipping and handling purposes.

The values I cite seem low, but if you try an maximize everything, you or she needs to realize it is a full time job and you are not taking salaries. So, I would cherry pick the best items and try to maximize the values and not put everything in the same basket. Choose a few outlets. The small stuff should be made into lots or a lot and sold rather aggressively.

Check to see what you need to sell the bikes. Are the bikes titled or will it be a bill of sale situation. For the expensive stuff I would want to have an original copy of the Death Certificate. These are about $10-$15 each. You will need original copies of the Death Certificate for titles (I think) as they will be filed with the title. You can make some xerox copies for anyone who wants one for a UFM or parts. I think you may also need a copy (xerox) of the order of the Probate court appointing the widow Executrix or Admisnistratrix. With the title (bill of sale), signed by the widow, a Death Certificate, and the Order of Appointment, you have a clear chain of ownership.

Depending on the situation, you may want a Special Power of Attorney from the widow. This would allow you to buy, sell, swap, trade and give away parts as you see fit. It could also give you the power to transfer ownership of the items. The widow's probate attorney should do this in consultation with both of you if you think it would facilitate things. If you were taking items to an auction I would have one so you can sign any paperwork on her behalf.

This is a pretty general outline, but it should help with the questions you should be asking. The details may vary. Warning: this is not legal advice!

David

David

 

[Magnetoman]

Part A...

All excellent advise. Thank you very much indeed.

I didn't realize it at the time I started this thread but by the time it is finished it may be one of the few threads that is of direct value to essentially everyone in the VOC irrespective of what particular model Vincent(s) they own (especially once more suggestions for Part B come in). Depending on where it goes from here, I may well compile the information into a 'how-to' article to submit to 'MPH' so the many members who don't read the Forum can benefit from it as well. Denial is a powerful motivating factor, and by not dealing with this stuff we are essentially living in denial of our mortality.

Your post made me remember that in my State motor vehicles that are titled only in the name of the deceased (e.g. 'Mr. Smith', as opposed to 'Mr. or Mrs. Smith') go into probate irrespective of a will or other aspects of inheritance law. That is, even if the will says everything goes to the wife, first the motor vehicles go into probate. However, all it takes to avoid this is for the owner to fill out a form for each vehicle that names a beneficiary for it. In that case it gets treated like any other piece of furniture. No doubt every State, and every country, handles this differently, but in my case 30 minutes filling out forms now can save a widow a lot of attorneys fees and a lot of time dealing with paperwork later. Further, several basket cases are in my name, but the titles are from another State since I never bothered getting the titles transferred when I moved. Again, although this will be a headache for me to do now, it would be a HUGE headache for a widow to deal with later, especially on top of everything else.

 

[Somer]

I'm the Executor of several collections. In her case the 1st thing is "where are the bikes?" If they are in the UK, then Las Vegas is a much less viable option due to transportation.
Also auction companies don't like to sell parts in certain venues. Some will though.
Auction house seller's premiums are negotiable. Quite often if they can be given an estate at "no reserve", they know they are guaranteed a sale. This is also a very transparent transaction. No finger pointing of folks being taken advantage of. This minimizes the labor of the widow.

 

[davidd]

Part B

You mentioned the most obvious way of transferring property which is to own it with someone else in joint tenancy with rights of survivorship (JTWS). If the idea is to minimize the probate estate (the portion of your property that will be included in your estate at the time of death) in order to simplify the estate and minimize taxes then JTWS is probably the easiest. Many states offer this form of ownership on the title and registration documents. At the time of death the property immediately transfers to the joint tenant and no other action is necessary. The property is not part of the estate. There is usually no notice to the taxing authorities although there may be other laws requiring you to volunteer that you have received property as income, but at worst it would be inferred that you only owe taxes on half of the property.

A more direct way to transfer property is just to give it away. If you son or daughter wants the bike transfer the title and agree to keep it in your garage until you are done with it. I know several Vincents that have been transferred this way. There are two potential risks. You have a falling out and the bike is not yours anymore. Second, you may have to ask your accountant how you should do it for tax purposes. If it is an A Twin, you may have to "gift" it over many years utilizing the maximum amount you can give per year without triggering taxes. This is usually a formality (or ignored), but you should get some advice from an accountant.

The third way to handle expensive or complicated property is to create a trust. I have seen this done, but it is somewhat cumbersome and expensive. A trust is a separate entity (like a corporation) that has a business life of its own. Some person or persons will be trustee, directing the trust and they will carry out your orders as detailed in the trust document. The bikes, parts, tools and any money will be the corpus of the trust. The named beneficiaries will receive the income from the corpus or the distribution of the corpus in a percentage amount specified in the trust. A trust can do almost anything, but that makes it expensive to create and maintain, so it is usually done where there are large assets that will support the high costs. The trust is the owner of title so the property would not be subject to probate.

Again, just general information. It is a good time to think about giving stuff away, even if you keep it in your garage!

David

 

[Magnetoman]

The third way to handle expensive or complicated property is to create a trust.

In fact, that's what I have for my family. The advantage of the trust over the other two ways you mentioned is if my wife and I die together (e.g. in a plane crash) everything still avoids probate, whereas if it were in joint tenancy there would be a problem. The issues of cost of creating and maintaining the trust, at least in my State, aren't serious. But, since laws are not uniform, this really is where someone needs to seek the advice of an appropriate attorney in their own locality to figure out what's best for them.

My State's motor vehicle department has a form designating the beneficiary of each vehicle and in my case that beneficiary is the family trust. Without the trust, if my wife were the beneficiary it would avoid probate if I died first, but not if she died before me unless I remembered to change all those forms. And, still, even if they made it to her without probate they wouldn't make it to the kids the same way if she died before selling it all. Again, laws seem to vary greatly, but in my State a trust solves a lot of big problems while creating only a few smaller ones.

It is a good time to think about giving stuff away, even if you keep it in your garage!

Are you insane?? If I gave it away, I wouldn't have it. No, I totally reject this. So, we still need more suggestions for Part B:

Again, the question is, what reasonable steps should we take now to maximize the inheritance for our families later?

Giving it away (or selling it) now is not a reasonable suggestion. The fact you even mentioned this is going to give me nightmares tonight...

 

[davidd]

Damn! I thought I was going to get at least on good working magneto out of this post!

David

 

[Robert Watson]

In some places, especially those with a fairly healthy inheritance tax -- an item can be gifted, but the gifter must survive at least 7 years before no inheritance tax is triggered. If someone knows this has happened and gets their vindictive nose out of joint, and turns you in to the Internal revenue -- a whole supposed scandal will be created, accusations will be made, club members will be expelled and life will be ugly for a bit.

This is a good topic for discussion so that there is a plan when the inevitable happens.

Note to self -- get off your arse -- soon -- really.

 

[Magnetoman]

Damn! I thought I was going to get at least on good working magneto out of this post!

Although it might have been headed in that direction, you completely blew it when you said I had to start giving away all of my motorcycles now. This is more outrageous and upsetting than anything Max wrote over the past two months, and that's saying a lot...

 

[Magnetoman]

Note to self -- get off your arse -- soon -- really.

I'll bet that note applies to most of the people reading this, including me.

 

[TouringGodet]

Also consult a tax advisor before choosing to gift high value items. There can be an impact on the cost basis the receiving person will have, which would then impact capital gains taxes if/when the receiving person sells the item. The same may apply to adding a person to the title. I have read many real estate articles where someone added a child to the title of a house, or completely transferred a house to a child. At the death of the parent, the child sells the house, but has to pay a large amount of tax, since the parent bought the house for 20K (for example), but it is now worth 500K. Adding the child to the title/giving the child the house transferred the low cost basis to the child. Depending on how it was done, it may be that 0 - 50% of the cost basis is 'stepped up' to the current market value, but you would normally want 100% of the cost basis to be stepped up, to avoid capital gains taxes.