Get expert help when passing on collectibles that have financial value. Thinkstock By Vickie Elmer, Contributing Writer From Kiplinger's Retirement Report, April 2014 Do you collect vintage radios, 19th-century dolls or perhaps African sculptures? It may take some expert help to work out how to pass the pieces to your heirs. Parents' collectibles can hold emotional meaning for adult children, and some collections carry financial value as well.See Also: 6 Things You Should Know About Collectibles Before you choose a beneficiary for your collection, sit down with your family and find out who—if any—of your heirs even want the items. One heir could prefer cash instead of your rare records, while another may feel a strong connection to them. You want to avoid surprises and hard feelings when the will is read, says Dawn Jinsky, a certified public accountant in the Southfield, Mich., headquarters of Plante Moran, an accounting firm. Jinsky suggests that you consider your goals for the collection. Do you want your heirs to pass on the collection to their own children? Who will be the best steward? Then consider whether you want to parcel out some items now, wait a few years or hold on to everything until you die. This may depend partly on the life stage and living arrangements of your heirs. Do your kids even have room for your collection? An adult child who relocates regularly for work may not be able to lug your Spode china teacups even if she loves them. Advertisement One reason to give away items before you die: Donors may bask in the joy of seeing beloved objects bestowed now. "Face-to-face giving is rewarding for the donor," says Michael Whitty, an estate-planning lawyer with Handler Thayer, in Chicago. Whether you pass on collections now or after you die, he suggests giving heirs a "user manual" on how to maintain, insure and sell the valuables. It could explain the insurance rider or how to create a wine cellar, for example. Jim and his wife, Martha, have started giving away some of their many collectibles to three children and nine grandchildren. The couple from the Chicago area asked that their full names not be used because of the financial value of their collections, which include antiquarian books, art and rare cars. Jim says that the couple have "had conversations" with their children about divvying up the array of collectibles they have gathered from around the world. Jim, a private investor, says that "each of the three kids is picking some" African art, and the rest eventually may be donated to a museum. The couple has had their collections appraised, but they want family members to choose items based on interest, not their value. When the couple moved into a smaller home, they sold a few rare cars and their daughter kept a 1955 Thunderbird. Because they no longer have the room for all the items, they intend to sell some of their books, including rare Shakespeare and first editions of the work of Art Nouveau illustrator Aubrey Beardsley. A granddaughter already has her own book collection and she will receive some books, including The Wizard of Oz. Advertisement Keep the tax tab in mind before you decide how to dispose of a valuable collection. Couples who have amassed an estate well above the federal estate-tax threshold of $10.68 million ($5.34 million for a single) in 2014 may want to give valuable collectibles to children and grandchildren, year by year. You can give each individual up to $14,000 in cash, securities and other assets ($28,000 for a couple) without having to file a gift-tax return. Anything above $14,000 counts against the estate-tax threshold when you die. The federal estate tax is 40%. Keeping the tax bill low is one advantage of giving away items before you die, says John Vento, a certified public accountant with Comprehensive Wealth Management, in New York City, and author of Financial Independence (Wiley, $40). Size Up Your Collection's Value A lower estate-tax bill may be an incentive to donate the collection if your kids don't want it. If you sell, you will pay a maximum 28% capital-gains tax on collectibles—lower than the federal estate-tax rate. (Your state also could impose its own estate or inheritance tax.) Whitty and his colleague, Mary Cascino, have helped people follow the gift-tax rules while giving away baseball cards, first-edition comic books, Hummel figurines and other collections. For estates of $5 million or less in 2012, collectibles—which are included among assets other than securities, small businesses and real estate—accounted for just under 10% of estate value, according to the IRS. Advertisement Before you start divvying up your collection, consider whether it is worth more intact or separated. A coin or stamp collection is "much more valuable together than apart," says Jinsky. Most art and antiques usually fetch more sold piece by piece. Families who own larger, more valuable art or other collections could set up a limited liability company, which would hold the pieces and be jointly owned by heirs. This is a useful way to provide shared ownership. Items in the company will escape estate tax, but there are strings attached. If you will gift a collection during your lifetime, you should get an appraisal done before you start giving it away, says Vento. The appraisal should be updated every five years or so. If you plan to give one child a collection appraised at, say, $50,000, you could decide to give another child $50,000 in cash or other property. Depending on the size of your estate, your heirs will need to get their own appraisal for estate-tax purposes. If the collection is unusual, such as antique African carvings, recommend an appraiser before you die. Advertisement To find an appraiser near you, go to the Web site of the American Society of Appraisers (www.appraisers.org), the Appraisers Association of America (www.appraisersassoc.org) or the International Society of Appraisers (www.isa-appraisers.org). Families that have gun collections or large wine collections may face extra hurdles. The possession of firearms is subject to a raft of state and federal laws. You will need to check with your estate-planning lawyer and the laws of the state where your beneficiary lives. Some grantors set up a separate "gun trust" to handle the intricacies, Cascino says. If you have a large estate with specialized collections to liquidate, it may make sense to name two trustees or executors. One should have expertise on your collectibles. If you don't specify the allocation in your will or trust, your heirs must agree on a fair allocation—or the trustee or executor will do it for them.