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3 Estate Planning Concerns for Wine Collectors

Posted on: May 22nd, 2016
bequeath wine collectionMore than one hundred vineyards from the mountains to the coast comprise the North Carolina wine market. Our state’s ties with wine are older than any other state in the United States. The “mother vine,” also known as “America’s Oldest Cultivated Grapevine,” has thrived in Manteo since the 1580s. 

Many wine collections likely include bottles from all over the world. Some vintages commemorate sentimental places, anniversaries, or personal events, which might have non-financial value tied to them. At the same time, these bottles could have significant market value to other collectors. A wine collector’s appreciation and understanding of their collection can be preserved for surviving family with thoughtful estate planning provisions.

Bequeathing a wine collection involves more than simply naming an heir. To ensure the collection is not damaged, sold off in haste, or otherwise devalued, a collector should consider and plan for a few administrative challenges the executor and/or heir will likely face:
  • Disposition. If an estate plan lacks direction about preservation of a wine collection, the executor might dispose of the collection. Selling wine is a complex and unpredictable process. Also, unique regulations apply to the sale, transfer, and distribution of alcohol. North Carolina law provides that an individual can apply for a one-time permit for the sale of alcoholic beverages received through an inheritance, allowing the wine to be sold at auction or otherwise to private wine collectors. According to the American Bar Association, “a quick decision to sell without considering venue and timing can diminish the sale proceeds.” An executor or heir might not be knowledgeable about the best means of acquiring the highest sale price for the wine. Wine auctions could offer the highest return, but typically they are scheduled far in advance. 
  • Storage and transportation. If the wine inheritance will not be stored in a location convenient to the heir, the heir will likely need to transport it. Proper packaging, climate control, insurance, and regulations for shipping alcohol should be addressed. Among the considerations the heir might face are proper storage during transportation as well as having an adequate wine cellar or storage site for long-term use once the wine arrives at its destination.
  • Valuation. An expert wine appraiser can help to determine a collection’s value to help guide selection of sufficient insurance as well as for tax purposes. As part of advance planning, the collector might wish to consider obtaining a wine appraisal now in order to provide a baseline for the executor and/or heirs’ use in managing the collection. After the collector’s death, the executor would likely need to select a wine appraiser to calculate the value to be included in the decedent’s taxable estate and would be responsible for distributing the wine to named beneficiaries (if specified in the estate planning documents) or otherwise disposing of the wine and distributing proceeds to heirs.

While one might invest many years, as well as much expense, into cultivating a wine collection, failing to address the disposition of this collection appropriately in one’s estate plan might result in significant decrease in value. An executor and/or heirs who are not knowledgeable about wine might not know to take care with the storage and transportation of a collection, or might fail to recognize a collection’s value and sell the collection at a price not reflective of its actual value. Providing instructions in one’s estate plan regarding the proper maintenance of a collection and selecting individuals who are experienced or knowledgeable about collecting wine to serve as executor or trustee can help to ensure the preservation of the collection and its value.
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