One of the challenges facing high-net worth (HNW) individuals and their families is managing their valued collections of fine art, jewelry, antiques, wine, coins, and other treasure assets. Unlike stocks, bonds, and other liquid securities with easily determined market values, each treasure asset is unique, with its own special appeal to a collector.
Without full documentation of the asset’s purchase price, provenance, condition, appraised value, and market demand, it can be very difficult to determine the current value for insurance, tax, or estate-planning purposes. In addition, heirs or trustees may not recognize the significance of an asset or maximize its sales value if an appraisal is outdated or poorly done or the provenance is missing. That documentation problem, of course, is multiplied with large collections that may include hundreds of unique pieces.
That’s an important consideration for attorneys, accountants, and other professional advisors, since fine art, jewelry, and antiques can account for a significant component of an individual’s total wealth. A recent Barclays wealth-management report found that treasure assets comprise 9.6 percent, on average, of individuals’ total net worth.
HNW individuals also like the potential investment returns from their treasure assets. According to Knight Frank’s Wealth Report, the nine main collectibles markets grew by 175 percent over the past 10 years — a far better record than U.S. stocks. Last year, all nine categories tracked by Knight Frank increased in value except for collectible furniture; alternatively, classic cars, coins, stamps, and jewelry were the top performers.
Another issue facing HNW individuals is that fine art, jewelry, antiques, stamp and coin collections, and classic automobiles are personal possessions that may be displayed or stored in different locations. If a theft, fire or natural disaster results in a loss, the collector will need to document which treasure assets were stolen, damaged, or destroyed, as well as their individual and collective values.