Episode 43 - The Hidden Risks of Collectibles: What Every Executor Needs to Know with Steven Joe
Powered by RedCircle
When it comes to estate planning, unique assets like fine art, vintage wine, rare watches, and even Egyptian antiquities come with more than just sentimental value - they come with complications. In this episode of Your Estate Matters, Nicole and Greg are joined by Steven Joe, Senior Financial Planner at Assante Financial Management, who dives deep into the world of collectible wealth.
From $5,000 bottles of spoiled wine to heirs feuding over doilies, Steven shares real-life stories and expert advice on how to preserve, protect, and pass down your prized possessions without creating chaos. Tune in to learn how to avoid the hidden pitfalls of alternative assets and why gifting with a “warm hand” might just save your legacy.
Nicole 00:00:02 Hello and welcome to Your Estate Matters with your host, my colleague Greg Brennand and myself, Nicole Garton of Heritage Trust.
Greg 00:00:09 Your Estate Matters is a podcast dedicated to everything estates, including building and preserving your legacy.
Nicole 00:00:16 If it's estate related, we'll be talking about it. We're having the conversations today that will help Canadians protect their families, their assets and their legacies tomorrow. With us today on Your estate Matters is Steven Joe, senior financial planner at Assante Financial Management. Steven is a leader in the wealth management space, focusing on helping business owners with complex needs as well as top earning professionals. Steve leverages his rare background in accounting, tax, financial planning and estate planning to provide high end service to his clients and the youth community. Steve has been active in Big Brothers for many years, helping underprivileged youth reach their potential through mentorship and the business community. Steven actively mentors several young business minds.
Greg 00:01:11 Steve, thanks for being with us here today to talk about wealth management in the context of unique assets. Tell us about yourself and your journey to your current role as a Senior Financial Planner at Asante.
Greg 00:01:22 Thanks, Greg. I was born and raised in Vancouver. I spent a little bit of my time as an accountant, so I was trained as an accountant, half in the accounting world and half in the tax world. I moved then to TD Bank, and I was a high net worth financial planner for a couple of years with another person on your show, Sandra, ably. And I've been at Asante about nine years now, probably, and it's been a fantastic journey. Just being a tax specialist in the financial planning world is a very rare thing. And so I've just really leaned into that aspect of things.
Nicole 00:01:56 And you're a long term senior volunteer with Big Brothers. Tell us about that.
Greg 00:02:01 Yeah. So my family's always really been into charity and the community. And about 18 years ago, I was looking for something to do to give back to the community and met a friend at a party. And he was a big brother and sounded a lot like something that I wanted to do. So I did that as a volunteer mentor for ten years, and then they targeted me and convinced me to join the board about eight years ago.
Greg 00:02:26 So I'm now the chair of the board of their foundation, and it's been a really great thing for me. I've taken more than I'm sure I've given to them. Steve, when it comes to wealth management, how do you unique asset classes such as fine wine art collectibles differ from traditional assets like real estate or stocks? It's a good question because traditionally I'm trained to advise on things like public market securities, even private assets like private infrastructure or private debt, that kind of thing. But, I found increasingly in my career, the larger the clients we would bring on. The more likely they would have these alternative asset classes in their portfolio. So we put out our discovery questionnaire with the client, and we'd sit down with them, and inevitably, we'd find out that they had some kind of collection art or cars or wine. I sort of went into the wine world about ten, 15 years ago with a mentor, my old boss. And so I have that connection with a lot of the clients. So it's, been an interesting transition in my career to see a lot more of this every year.
Nicole 00:03:34 So what are some common mistakes people make when they include valuable alternative assets as part of their wealth management plan?
Greg 00:03:42 I think there's a very long list of alternative assets, so maybe we'll use wine as an example. One of the mistakes people make are they just don't know how to handle things like wine because it is a something that can just spoil, right, with, either light or heat or all these things. So storage is a big issue for the executor. You know, we, heard about a situation where the executor forgot to pay the hydro bill and the storage system for the wine turned off. So the fan turned off the humidifier turned off, the cooling system turned off, and they ruined hundreds of thousands of dollars of wine just because they forgot to pay a hydro bill. So, you know, when you have these types of unique assets, the executor really needs to know what they're dealing with. So I find that's an issue. You know, the other common issue is security. I would say that people don't know often the value of these things, but maybe one person might.
Greg 00:04:42 And so you need to be very careful about security of the assets because someone can come in and oh, just take a bottle of wine from the fridge. And it happens to be a, you know, 3 or $5000 bottle of wine. Very tricky to secure these types of assets if you don't know the value. When we get to the sale, the executor often doesn't know how to sell the asset, what the value is. Who is going to sell the asset? So it can be very tricky, which is why we often suggest corporate executors or executors that are told in advance about what kind of assets are there and what kind of values are there.
Nicole 00:05:17 What have you seen that like? We've had estates where there's been very valuable art collections. Do you see watches? Do you see wine? Cars? What? What other interesting alternative assets have you seen?
Greg 00:05:30 Yeah, I would say art is probably the most common. I have seen antique furniture. That was a very interesting one. And a lot of that furniture got donated to museums in the United States.
Greg 00:05:42 I've seen antiquities. I have a current client right now who's got a lot of antiquities, particularly stuff that they buy in London. And so, you know, antiquities is a very rare asset class and in particularly in Vancouver, the appraisers for these things or the auctions for these things don't exist in Canada at all. And they're very difficult pieces to value and to understand, but pretty traditional things. I haven't seen anything too crazy, if that's what you're getting at.
Nicole 00:06:09 But so in antiquity. What is it? Books. What is it?
Greg 00:06:13 Yeah. So in this particular client's case, they have a lot of Egyptian and Roman antiquities. So they have Egyptian jewelry, for example, and Roman jewelry, you know, Egyptian masks and things. And they put it as art pieces in their house. So it's sort of a question of is it art? Is it an antiquity? Is it jewelry? What is it? It gets very complicated.
Nicole 00:06:34 What's their plan with respect to securing it? And what happens when they pass away? Is there a standard practice about how to protect it and retain its value? What do people do?
Greg 00:06:44 Yeah, I think how security is the number one thing.
Greg 00:06:48 You know, if you walk into someone's house who's a collector and they have a house full of antiques or antiquities or art. Anything could be of any value, really. And inevitably, someone knows a little bit about the value. You know, might be one of the children know or the spouse knows or a friend knows. And so you really need to secure where the assets are. Some clients have offsite storage. So they'll have, for example, a wine collection in a private wine vault in Vancouver. And there's a few of those in Vancouver. So they might store the assets there. And those have very good security and insurance systems. But usually the houses where a lot of the assets are held. Yeah. And that goes to a fundamental role of the executor. Administrator is securing that house. The minute you hear about the death. Right. Because everybody does know of the value and is very portable. But are there tax.
Steven 00:07:44 Implications unique to passing down collectibles like wine or art or rare watches? And how can a state planners mitigate potential issues that would occur in the state?
Greg 00:07:55 Yeah, I'll give you the tax technical answer.
Greg 00:07:57 You know, and I think, some people don't want to hear it, but it's sort of like any other asset. Generally there's a $1,000 threshold for these things. So you might, you know, gift a bottle of wine through your estate or, or even while you're alive to somebody. And if it's under $1,000, you're not going to pay any capital gains tax on it. But, you know, for things that are larger, like cars or jewelry, all of these things can appreciate quite a lot. And so your estate would be subject to a capital gains tax. You know, there's a few different ways to mitigate that. I mean, I think we see a lot of donations, especially at someone's death, often because somebody isn't really, you know, dying to take that rare asset that was unique to that person, but also because the donations got a really great tax credit. So that would be generally what we see. You know, we always joke in the wine community to drink your expensive stuff before you die.
Greg 00:08:50 You don't want a huge capital gain issue. You know, it's better to pass on the $100 bottle than the $5,000 bottle. It's a funding recommendation.
Steven 00:08:57 Yeah, and I don't know what year they put that thousand dollar limit up, but it's got to be a couple of decades already. It's never moved up.
Greg 00:09:06 Yeah, it's sort of unfair for certain things if you think about it, because cars are never going to be under that limit. But you can have a wine collection that's the same value. But because they're individual bottles, you know, the majority might be under the $1,000 limit. So.
Nicole 00:09:20 So what would you tell a collector about how to make sure that these valuable items are correctly valued and passed to who they wish?
Greg 00:09:29 So if it's a diligent collector, you know, maybe an accountant or somebody, let's say, like myself, I would hold an inventory list of everything, and I would keep that list somewhere where somebody could find it. You don't want to be in a situation where you don't even know what you have, and somebody can come in and remove an asset, Especially something quite valuable.
Greg 00:09:49 So certainly a list is good. And then just communication to the executor. So often, you know the executor is the spouse or child but also a trust company. And so communicating to them you know what's what. You know. What are they looking at. I think this is generally done within families. You know, if somebody is a big, you know, collector or hobbyist of something, their family generally knows what's what in the assets. But at a certain point it might be very difficult just based on the quantum of the items. I would also say if you're interested, you know, you would you should certainly talk to an auction house or an appraiser before then. You'll get an understanding of the valuation, but the executor will also know who to call in case something happens. And that's usually the first call they make for that particular asset.
Nicole 00:10:38 Yeah. Jim Finlayson, who's a art appraiser and he mentioned something about remember provenance.
Steven 00:10:45 Yeah. The provenance the paper, the back papers to whose hands it's been through.
Steven 00:10:50 And how does it establish its it's originality?
Greg 00:10:54 Art is the prime example of that. Wine is also very high on that list. When you're selling wine, say, at auction house and say you're selling large amounts, they will want to see that it was stored correctly. You know, they want to see that it is authentic wine because wine could be faked. And there's a whole movie documentary on that I think a lot of people have seen. So certainly they're going to they're going to want to see some kind of provenance. They're going to want to see that you have a cooling system in place that, you know, didn't go out of system, for example. There's certainly a provenance of where you might have purchased the wine as well, very similar to art. I would say wine's lifespan is a lot shorter than art and antiquities. So the provenance is usually 1 or 2 hands before, you know it gets to the collector. But for things like antiquities, it's very different. You need to see a long chain of certification, you might need to see appraisals or specialists, authentication system or authentication reports.
Greg 00:11:54 It's a it's a very different kind of game when it goes to those assets. But again provenance is really important.
Steven 00:12:02 So when they're looking at wine collection and collectibles and accurate appraisals, like you were just saying for this antiquity collection, yeah, there's probably a handful of places that could do that and provide, you know, an executor, real values. And of course, you wouldn't get that selling it here. Have you ever found a client that had to move it to another location to actually deal with the sale?
Greg 00:12:28 This is very common. And have you seen the show Antiques Roadshow?
Steven 00:12:33 Yes, yes.
Greg 00:12:34 Very popular show. My parents love this show and everyone brings their unique thing that was from their grandparent or their parent to this, to the show, and they get it appraised. And, you know, they're often blown away by some of the values or these things. These appraisers are often at the large auction houses, or they're independent and they're in large city centres and things like London, things like New York, Hong Kong.
Greg 00:13:01 So for rare, rare or illiquid assets like art and antiquities, for example, you often have to bring it to somebody to appraise it. In London, let's say. A good example would be antiquities would be London.
Steven 00:13:16 And it would be very unique to have to ship it there and all the paperwork, because Jim Findlay talked about that, you know, just to get it across borders. It's quite interesting.
Greg 00:13:26 Yeah. Absolutely. Absolutely.
Nicole 00:13:28 But, you know, and I think in this current climate, I mean, I think there's controversy around that and I guess cultural appropriation and I know my husband's Greek and the Elgin Marbles are a hot, hot topic in our house and that Greece wants them back and like, can you just ship these things around? Are there restrictions around what you can do with different artifacts or art?
Greg 00:13:52 That's an interesting question. My client framed this to me once. He said to me, you know, I feel comfortable buying from the thieves, you know. You know, and he said, you know, I really want, you know, this thing from my culture, and I'm just going to buy from the British people that took this thing from our land and just bring it back to our land.
Greg 00:14:14 And I, you know, I'm just going to use my own resources to that. So very sort of interesting take on that question.
Nicole 00:14:19 Is that justice?
Greg 00:14:21 Yeah. Maybe he's just exercising his own justice and monetary policy, I guess. There.
Nicole 00:14:26 So can I ask a question of you as a wine guy, just out of interest that you said it's not just provenance, but showing how you store it? Because I think we're all probably interested to make sure we're not ruining our own wine. Given that you're an expert in this, how are we supposed to correctly document and store wine so we don't damage its value?
Greg 00:14:47 Yeah. I mean, a great question. I think if it's quite a valuable wine, they want to see the original receipt so they know where you got it from. Usually the best would be to buy X Chateau, they call it so directly from the chateau. Then if you weren't buying it there, you'd buy it from maybe an auction house and store it for, you know, 20 years.
Greg 00:15:07 So you have the original receipt from whatever auction house you bought it from, and then they're going to want to see pictures of your cellar. They'll have you send pictures in of your cellar with the humidity system. And, and, you know, you'll write some kind of note about it's never going to service and all these things. So it's a pretty serious, you know, business on the level.
Nicole 00:15:29 What's the 101 on how we're supposed to store our wine?
Greg 00:15:32 The simple checklist of storing wine is keep it away from heat. Number one, keep it away from light. Number two, you certainly want to keep it relatively humid so that the cork doesn't dry out. So if you happen to be in a really dry area, for example, you want to make sure the bottle is on the side so that it's always the cork is always a little bit wet. So humidity is relevant. You don't want it to be an area where it shakes a lot. So you wouldn't put it, you know, in a room that was next to a train tracks or, you know, something like that.
Greg 00:16:00 Not usually relevant, but cold, dark humid. Just think of what a 16th century, you know, European cave looks like. That's the ideal spot.
Nicole 00:16:10 So room temperature is too warm.
Greg 00:16:12 Not for most wine, unless you're long term storage. I would say, you know, room temperature is fine for most things, but, you know, as soon as it's in the kitchen above the oven and it gets, you know, 30 degrees in the summer or, you know, regularly warm, I think that's where you get into a little bit of risk.
Steven 00:16:29 So do you recommend incorporating unique asset classes into trusts or corporate structures to manage the taxation and liquidity issues?
Greg 00:16:36 Yeah, it's a good question. I rarely see circumstances where these types of unique assets make it into trusts and corporations. It is common on the testamentary trust side, so if somebody passes away. A good example would be someone passed away prematurely and they had a car collection, and you wouldn't want your 19 year old child inheriting a bunch of vintage Ferraris and driving these things around at 19 years old with their buddies.
Greg 00:17:04 So testamentary trusts, I would say, are highly recommended for wealthy families, especially when these type of unique assets come into play. The argument for corporations is a little different. We have clients that have cash that is stuck in the corporation. They don't want to pay the personal dividend tax to take it out. So they will sometimes invest in unique assets, maybe cars or stamps or coins or that kind of thing. You got to be a little bit careful there, because if you're using this asset for your own enjoyment, there could be a shareholder benefit taxation issue. You know, it's a bit of a gray area. I don't usually recommend it.
Nicole 00:17:40 What about this strange world of digital art? Are people actually purchasing that?
Greg 00:17:45 We've seen a little bit of it in the younger generation. The wealthy business owner, clients, you know, who might be sort of 60 to 80 years old aren't touching this stuff. I haven't seen a single client other than maybe as a bit of a joke. You know, buy a small piece or something like that.
Greg 00:18:04 But generally, I find the younger generations are buying these things. It's still so early in the game to see if it's viable as a as an asset class. I think some people are sort of hoping that they're so early into it. It might go up, but it doesn't have the history of returns. And the volatility is so wide. You can see anytime the crypto market is down, these things really take a hit. It's a very difficult argument to make on these. But you know 10 to 20 years I could be very wrong.
Steven 00:18:32 Are there specific insurance or documentation requirements the collector should have in place to protect these assets during a state administration.
Greg 00:18:42 Absolutely. Sort of goes back to the question earlier to secure the assets. You know, I think we'll use wine, for example. Again, if, you know, you were the executor of a large wine collection, I would call one of the wine storage companies to come in and inventory the assets and keep it off site. They have all the right temperature control, you know, and safety protocols.
Greg 00:19:02 They have all the correct insurance for these things. These locally would be groups like 13 C or Griffin Wine Storage or the bank of a wine vault. On the insurance side, there's numerous insurance companies for different assets and better insurance companies for certain asset types. So one would be Chubb would be very good for wine. AXA is very good for fine art. Hiscox in the UK is very good for a range of things. AIG is very good for art, jewelry and collectibles. So, you know, if you're going to be holding on to these things because you're waiting for probate, or you want to hold these things for minor beneficiaries or in a testamentary trust, you certainly have to think about the insurance and the security side, but it can be a real pain for the executor because it's a lot of work, a lot of time.
Nicole 00:19:50 If you had some extremely notable piece of art, could you borrow against it?
Greg 00:19:55 That's an interesting question. I've never seen it in my career. I think this might be something that an American alternative borrower might entertain this.
Greg 00:20:07 You'd have to get an appraisal. You know, you might even have to put it in a location that is, you know, maybe a secured warehouse or something so that they could control the asset or have some kind of guarantee in the asset. But, that's a very uncommon scenario, but maybe more common in New York than Canada.
Nicole 00:20:26 What role do, like auction houses and specialty brokers have? Like, I think you mentioned some of them for wine. And how do people identify who these specialists might be?
Greg 00:20:39 The auction groups are going to be the key groups you're going to look to, to liquidate these assets. It's very hard for an executor to liquidate these types of assets or get full value. Just conceptually high level. The more buyers you have for an asset, the better price you're going to get. Generally. So if you had a private car collection, you're probably not going to sell that in Vancouver. You know, especially if there's we're talking millions of dollars, you're probably going to ship the cars to somewhere like New York, a reasonable shipping place.
Greg 00:21:07 You know, you might go to London if you were in in Europe, for example, you might go to Hong Kong or Singapore if you were in Asia, and you're going to put it with one of the big auction houses and have them sell these things for you.
Nicole 00:21:20 How do you think the tariff situation would come into play there?
Greg 00:21:24 Yeah, that's such an interesting, interesting question. You know, I think if I think if we are in a broad tariff world, this could be something that gets caught under that and certainly would restrict, you know, your movement of assets into, say, the United States is a Canadian. So it might the executive might have a very difficult choice to say, do I pay this tariff with the hopes that I get a better sale outcome, or do I take my chances locally with fewer buyers? I think it's a very difficult question. And again, this is why we suggest that corporate executors, because they have the sophistication to handle these types of things. I would say you should be engaging the auction house or the auctioneers before you pass away.
Greg 00:22:04 A lot of the people that engage in these hobbies, they have friends in the hobby. They have some kind of tie to the auction house, or they've been buying at the auction houses for a while. They know people in these industries, in these specialties and these hobbies. You should be going to them first for the assistance. And the person that's the collector should be writing these things down. They should be introducing their executor or their power of attorney to these individuals at an early stage.
Steven 00:22:31 I'd say it's kind of like with vehicles for originality. You have to get a qualified rider to come in and look under the hood and say it's 82% original, or it's 95%, and that's completely the value. If you take it down to the Barret auctions or somewhere down in, you know, in America. So for individuals looking to pass down a passion for wine or other collectibles, what are some creative ways for them to structure an estate plan to preserve their legacy? This is part.
Greg 00:23:02 Logistical, part psychological.
Greg 00:23:05 I think we have often seen that the children of the collector are not super excited about their assets. It's hard to transfer that passion in something to a child who might go away for university. You might not even live in the same city as you anymore. You know, there's a stigma around wine, for example, that it's less healthy than Then it otherwise could be. And children or the younger generations aren't drinking as much alcohol. So that might be something that, you know, neither child likes their parents. Wine collection, for example. So I would say have the conversations with your beneficiaries while you're alive. You don't want to assume anything. You don't want to hope and pray that they're going to like this thing at some point down the road, and try to force it into their hands. We always like to promote transparency, though. We find sometimes the person who passes away will give their assets to their hobby, assets to one child or another, and that can create a little bit of challenge, especially if there's a disagreement in who should be getting what.
Greg 00:24:14 So have a family meeting would be a good suggestion. Have the discussion before you pass away, and then understand how you're going to equalize the other beneficiary with liquid assets or real estate. It's okay to give all of your wine, or all your cars or all your watches to the one child, but you need to be ready to equalize the other child, and that might be through a life insurance strategy. It might be through investments or real estate, any number of things. In very rare circumstances, I've seen what I call a draft. Have you heard of this before? A draft is sort of where the beneficiaries will come in, and they will pick various unique assets in some kind of order. And so if you're looking at art and there's 100 pieces of art in someone's collection, and there's five beneficiaries you might go through in order, pick the art off the wall in the order that you want it, not necessarily the dollar value order. It's uncommon, but for very large collections, I've seen it once or twice.
Steven 00:25:22 Right. And that might cause some unique ways the estate would be taxed Because a kid could be picking five pieces of art that add up to $2.5 million, and somebody else picks five, that that's 75,000. And where does, you know, talking about the $1,000 limit? Where does the tax burden lie in the estate?
Greg 00:25:43 Yeah. So, you know, a child that makes a higher dollar value item, if that's the way that the estate is set up, you know, the estates are going to bear the tax and the beneficiaries are going to bear that equally or based on the their ratios of their beneficial interest in the estate. So there can be an unfairness there as well. It's very tricky. We usually say if you're going to do a draft, there has to be some kind of equalizing provision with cash because that solves the problems. If you don't have liquidity. It can be a very difficult thing. I don't know if you've seen the TV show on Apple TV, Drops of God. You know, it's almost a show of what not to do.
Greg 00:26:22 In this case, it's a show about a man who dies with the most valuable wine collection ever. And he makes his daughter and his protege, his wine protege, compete for this thing as their estate gift. It's a crazy show and quite fantastical, but I recommend you watch it.
Nicole 00:26:43 So you think about a like a renowned collector like Bob Rennie, for example. And he. I can't even imagine how many very interesting and valuable pieces he has. Like, I wonder what he's thinking about that. Like, there would be enormous logistics around storing it now and then, what that looks like in the future.
Greg 00:27:04 Yeah, I mean, hopefully he has a good estate plan and he's had the conversations. You hope he's got good advisors for pieces like art. We find a lot end up in museums or galleries and talking about the donation tax later. But that's a really common way to pass things down. It's uncommon that, you know, one beneficiary will want to take 30 pieces of art. They may not even have space in their home or the residence for these things.
Steven 00:27:33 And when we're talking about all these significant collections, I guess we'd call them. Is this mostly in families that would be at the size of a family office? Because you almost need curators if you've got all this stuff in five different houses scattered over some jurisdictions, it would be too much for the family, I'm sure, to inventory, make sure it's insured, make sure it's the right temperature.
Greg 0:27:55 Yeah, there's a direct correlation between these expensive hobby, unique assets and wealth. I think once you start to get into the over 100 million range, it's likely they're going to have some kind of collection. It's reasonably likely it's in multiple jurisdictions. It's often hard to bring these things from between jurisdictions because of the shipping costs and the and the taxation of these things and the tariffs. So we do find that clients will leave certain collections in the jurisdictions that they bought them. That's not uncommon. And it gets very complicated when you're dealing with multiple jurisdictions. And I know Cheyenne Reece was on the podcast recently as a cross-border specialist, and we've seen a lot of clients, particularly with their collections in the United States, cars and wine, for example.
Nicole 00:28:46 So Michael, a Dane, created his own gallery. I think that was the way he solved that issue. And, I mean, that's an incredible legacy.
Steven 00:28:54 And I think you've seen many American famous people create auto museums. You know, they have five warehouses of their own cars there, and then they just decide, well, we'll just make an auto museum.
Greg 00:29:06 Yeah. At some point, you know, the question is, does it make sense to just start your own?
Nicole 00:29:12 Well, there's a storage facility in Vancouver where you can store luxury cars, and then there's a place like where you can hang out with your car kind of thing. So there are there are unique, facilities for people that have these special assets.
Greg 00:29:29 Yeah, there's a couple of those for wine as well. And is that right? Little tasting rooms that are attached to the collectors lockers. That's pretty common. And I think this model has been around for a little while. And places like London and Hong Kong and New York.
Greg 00:29:43 So thank you. We're starting to catch up on these things as our wealth grows.
Nicole 00:29:47 Steve, do you recommend that people gift with a warm hand if they've got things that are particularly valuable or special, or do you recommend that they make it as part of their estate, like maybe it's a really special car or jewelry? What are your thoughts?
Greg 00:30:03 It's funny you say that because I have that exact quote in my notes here to talk about. We always suggest gifting it with a warm hand instead of a cold hand. It is usually something that means a lot more than money to our clients. So if they're passing something down to their children, they want to give the children the context of that. They want to see their child enjoy it, you know. And we'll use cars. For example, I have a client that he goes out with his son regularly and they drive the cars together. And, you know, he hasn't given any of the cars to the son because he's still in his early 20s.
Greg 00:30:38 But I think there's a assumption that a lot of these things will go to his son. And you can have these memories, you know, driving with his dad and enjoying that asset. The warm Han conversation is always better because it deals with any issues that might arise up front. Sometimes people feel entitled to certain collection pieces or assets, and if you didn't have the conversation with the family before, it can lead to a lot of stress. And oftentimes we're seeing that the assets that get passed down in these collections, they're not the most significant assets in the estate. There's real estate. There's investment holdings, which from a quantum perspective usually out outweigh the. Collections. But for some reason the heirs feel very strongly about these things. So the earlier you can have the conversation or the earlier you can pass it down, the easier the conversation and the reduction in estate risk.
Steven 00:31:37 How do family dynamics come into play when dividing valuable non-financial assets like art or wine, amongst others?
Greg 00:31:45 Great question. I think valuing the assets before death is very important.
Greg 00:31:52 There can often be a misunderstanding in the value of some of these things. And so when a good example will be, one child will really like a piece of art, and another child will like another piece of art, but their values could differ significantly. So having the conversation of, hey, you know, if you're going to take that valuable piece of art, you're going to get less than the estate that you know. That's a thing that people should mentally sign off on, you know, especially because we find some of the errors can be a little bit entitled to these pieces. Maybe they grew up, you know, playing in the car or looking at that piece of art. It was in their room or they shared some kind of special moment with their parent. So you certainly want to have as much transparency over this as possible. At the beginning, I think the other thing to say would be don't assume anyone wants anything. We have seen too many times where the person that's preparing their estate documents is assuming that certain assets are going to certain beneficiaries, but they've never had their conversation.
Greg 00:33:04 That can be a big mistake. It's very hard to know what people are thinking or why they think certain things. So again, have the conversation, have a family meeting. I think you've had several people on your podcast that are good at hosting these family meetings, have these family meetings very early on. It'll just reduce the risk of bad feelings. Another point is, why even gather all these things? Why make all this money? If you're going to leave it in a dog's breakfast at the end of this thing, and everyone's going to fight over it, you might as well have just left nothing at the end of the day. So I think you want to remember that if you're in the estate planning process.
Nicole 00:33:41 Yeah. It's funny. One of our guests, Linda Chiu, who's an amazing estate organizer, she's got a presentation and she entitles it. Your kids don't want your stuff. And. And so she counsels people to downsize and things. But, you know, every family is unique. And we've had heritage trust has had two estates where it was like, complete combat over what were regularly like common suburban house items, like when we were in a like nice things, but like ordinary sort of suburban house things.
Nicole 00:34:15 We were in that home for seven hours with the children, mediating, arbitrating, and we're talking like ceramic frogs and doilies. And it was interesting. And then we had another one with two daughters and we were literally they could not be on the same floor with each other. And we were literally running up and down the stairs with like crockery and things distributing. So, you know, every family has its own unique culture. So I think your advice to have transparent, open conversations to the extent possible at the outset to try to avoid that. But if maybe you've got more strained family relations, do you sometimes recommend that people proactively give things to museum rather than giving it to children? What are your thoughts about that?
Greg 00:35:02 Yeah, I think that there's strain family dynamics. We start with the legal aspect, and we might look at recommending in British Columbia a joint partner trust or an ultra trust. This is a structure you know very well, obviously, and reduces the ability for a beneficiary to challenge an estate.
Greg 00:35:25 So we'll often suggest that anything that could be contentious go through that, that entity. And then aside from that, if you if you haven't attained the age of 65 to set that up, but you want to give stuff to charity, I would say have the conversation regardless. It will be a hard conversation, but list the charity in the estate. The problem there is that the estate could still be challenged by the beneficiaries, regardless of who it's going to. So it's not a foolproof example. I still like the joint partner trust and alter ego trust way of distributing assets, or you distribute the assets to the museums and the charities while you're alive. That is something that's very difficult to contest unless there's a capacity issue. But if you see this coming and there's a lot of difficulty in the family, you can always give stuff away while you're alive and you have capacity.
Nicole 00:36:23 Steve, for our listeners that might not have context. Tell us why gifting money or collectibles through a joint partner alter ego trust is less risky than a general estate.
Greg 00:36:37 Yeah. So we like the joint partner alter ego trust because it doesn't have the same legal mechanism that a beneficiary could challenge through in. I'm not a trust lawyer, so I'll just recount what I know from them. My understanding is that through the Wilderness State's Succession Act, someone can challenge a will in British Columbia. And the people that could challenge a will. The classes of beneficiaries that could challenge a will would be a child or a spouse. So if those are the beneficiaries that might be the beneficiary to challenge the where the assets go, the liquid assets or the unique assets. Then you may want to move your assets into a trust you specify. Trusts cannot be challenged under those same rules, so it's much more difficult for beneficiaries to challenge a joint partner trust or an ultra good trust under the trust law. It's a different mechanism and it's a much higher bar.
Nicole 00:37:42 Yeah. And if people are thinking this, certainly they should get good advice. Yeah, yeah.
Steven 00:37:48 Steve, are there any final tips for our listeners?
Greg 00:37:52 Certainly there's a few key tips, I would say.
Greg 00:37:55 You've heard these themes already today, but don't wait until it's too late. Don't wait until you're 80 and you sort of assume what people want and put it in your will. Have the conversations early. Update your estate documents regularly. Sometimes we find that someone's estate documents are silent on the collections entirely, and the collections are in the tens of millions of dollars at that point. That can create problems. If you have a complex or challenging estate, certainly consider a corporate executor. It's very difficult for the family to handle these things, especially when the dollars get large and the assets get more complex. It's a it's a big burden on the family. And you can let them know that the corporate executor is going to handle things. I think it removes some of the potential conflicts of interest of having an executor who might also be a beneficiary of these assets. The other thing I would say is, is don't put too many eggs in one basket. Some people get pretty excited about these hobbies and are tempted to put a lot of money into them.
Greg 00:39:03 We know when we see clients come in with over 5% of their assets in these hobby. Unique assets. Some warning signs, you know, some warning signs flash for us when we see over 10% of our assets in these unique hobbies, we generally tell them they should really reconsider or consider diversification. You know, these things are very unpredictable. They're not very liquid. people don't understand them. They're hard to sell. It's a riskier asset than a lot of things that people can find in the public markets. We've also put together as a firm this document called Prepared Family Inventory, and it is a PDF. But clients can print it and handwrite into it their wishes and information about their collections and who to call when certain things went bad. So that's a really nice thing to have, and I'm sure you probably have something in your executor or trustee checklist as well.
Nicole 00:40:02 I would say one thing to people about is guns. So if you have firearms, obviously make sure you've got the correct licenses. But keep in mind whoever you're gifting those to has to also have the correct licenses.
Nicole 00:40:19 So you've got to think through that carefully. And we've had estates where we've had firearms. And there are a lot of considerations around transport and storage.
Steven 00:40:29 Yes. And also some of the ones that were collected and perhaps not reported may now be on a list that you that you can't actually own them at this time. So you would have to arrange for that.
Greg 00:40:42 Oh, interesting. Yeah. Pretty uncommon again. You never know what you're going to get, so don't assume you know how to handle these unique asset classes.
Nicole 00:40:51 Firearms actually aren't that uncommon.
Steven 00:40:54 In the city, more so than in the rural areas. The rural areas are certainly.
Nicole 00:40:59 But that is definitely. Make sure you've you're getting the correct advice and that you've thought through the storage, the licensing and the recipient. And don't leave the firearms to people that aren't allowed to have them.
Greg 00:41:14 Yeah. Agree.
Steven 00:41:16 And how can our listeners find you?
Greg 00:41:18 You can send me an email at Asante or you can go to my website Steven, Joe, Steven with a V.
Greg 00:41:28 So either way you can get A hold of us and we'd be happy to have a complimentary meeting with your clients to understand if there was any benefit of our advice.
Nicole 00:41:38 And about investments, but possibly wine as well. Sure.
Greg 00:41:41 Why not?
Nicole 00:41:43 Thank you so much, Steve.
Greg 00:41:44 Thank you. Steve.
Disclaimer 00:41:45 Steven Joe is a senior financial planner with Asante Financial Management Limited. The opinions expressed are those of the presenter and financial advisor and not necessarily those of Asante Financial Management Limited. Please obtain professional financial advice or contact Steven Joe at 604 77526 or visit Steve and Joe AL.com to discuss your particular circumstances prior to acting on the information presented.
Nicole 00:42:14 This podcast is for informational purposes only and should not be considered individual, legal, financial or tax advice. Make sure to consult the advisor of your choice to advise you on your own circumstances. Thank you for joining us for this episode of Your Estate Matters. If you like this podcast, make sure to follow it on your podcast platform of choice.
Steven 00:42:36 Whether you are planning your own estate or you're acting as executor for somebody else's heritage, trust can help.
Steven 00:42:42 Partner with Heritage Trust to protect your family, your assets, and your legacy.
Nicole 00:42:47 If you would like more information about Heritage Trust, please visit our website at Heritage Trust Company.
Steven 00:43:00 This podcast is produced by Podfather Creative.