Seniors, baby boomers and retirees are masters at acquiring things. It seems that the millennial generation is, for the most part, uninterested in their parents or grand-parents “stuff.” Which leaves the boomers generation faced with a very large job: getting rid of excess stuff. Whether you are newly empty nesters moving to smaller digs, helping your aging parents sort through their beloved belongings or faced with one of many of life’s transitions, downsizing is always a necessity at some point in everyones life.
Knowing the value of items is key when it comes time to decide what to Keep, Sell, Donate or Discard. Regardless of what or why you’re selling personal treasures, your goal should be the same, maximize your investment to get as much as possible for your belongings, with as little emotional and physical stress as humanly possible.
Top 10 tips to help you decide what to keep, sell, donate, or gift and when to call in professional help.
1. Understand that downsizing is personal.
Enough Stuff – Downsizing | Antiques Consignment | Estate Liquidation expert, founder, Dordy Fontinel has spent her life managing “stuff.” Dordy has made her living as an Antique’s show promoter and dealer, interior designer and even a personal tailor. Her life has been spent catering to the needs and tastes of a wide variety of people, and their “stuff.” Recently, with the passing of her 93 year old father she was faced with the task of managing the treasures, memories, and emotions left behind. Most importantly, she is helping her 89 year old mother through this major life transition, helping her to downsize to just the right amount of stuff for her. While in the process of grieving, she has helped her mother to sort through and clear out possessions in preparation to settle into a new senior retirement home.
Even as a master organizer, business woman and professional “stuff” manager, Dordy experienced first hand the emotional stress that the downsizing process can cause.
2. Find trusted experts.
With over 40 years of experience buying and selling Antiques, Dordy has seen it all, from new collectors to those ready to cash back in on their investment. Knowing the value of an item in any given market is a must. Do-it-your selfers who attempt to price and sell items themselves at a yard sale, on eBay or what have you, without the assistance of a professional, generally do not reap the maximum value from their items.
Depending on the quality and variety of items you wish to sell, calling in a certified appraiser is often needed. Dordy Fontinel has a massive black book of appraisers and experts that cover just about every area of collecting, from furniture, to jewelry, folk art, fine art to lighting, stamps, silver, china, linens, historical memorabilia and more.
Dordy can quickly tell you if you’ve got a house full of reproduction furniture or genuine antiques worth shopping around to dealers, auction houses, other collectors and even museums. Grandma’s jewelry? Bring those items to a gems and jewelry appraiser. “It’s often the things that people might think are worth the most that aren’t, and the things they have little regard for that have the greatest potential for value,” says Fran Zeman, a personal property appraiser in Brooklyn, N.Y.
You may have a receipt showing that your parents paid $15,000 for an item, an item family members are feuding over, come to find our it was a really good reproduction Tiffany Vase. Then there are the pieces no one wants that are worth thousands and are overlooked. It can not be stressed enough that knowing the value of an item is paramount! Anyone Dordy recommends will always be personally vetted and come with references.
4. Be wary of family tales.
Just because Granddad believed something was valuable doesn’t mean it is. “People can be misled by dealers at the initial sale: ‘It’s an 17th century piece, made by a small craftsman in ….,’ stories get exaggerated or misinterpreted,” says Dordy.
On the other hand, family members may have something that they use daily and don’t recognize the value of or because it is special to them family members assume it is valuable. Stamps, gold coins and jewelry are some of the easier items to value, it’s the other “stuff” that is the more difficult.
It looks like trash, but it isn’t. It is often a first instinct to just start “pitching things.” Many items that appear as trash to the untrained eye are in-fact scaleable!
6. Call in an expert.
Depending on the size of your estate there are many options. Dordy works with clients to help evaluate whether to incorporate an auction house to reach a regional or international market, host an estate sale or sell speciality items in a variety of other ways. She spends time reviewing your household contents, and suggests items you might consign, vs. those you may sell in bulk vs. those that may be worthy for donation.
7. Donate and deduct.
Old clothes and rickety furniture are a great option for donation to the Salvation Army or Goodwill, they will even pick them up! From valuable treasures to old computers, donation is a great option, wether giving to a local charity or museum. Aside from the satisfaction of giving back, you can receive a charitable deduction on your tax return—assuming you itemize, at times this deduction can equate to a substantial amount to the bottom line of an estate.
Note: You must list anything you donate worth $500 or more on Form 8283 attached to your 1040. If an item you donate is worth $5,000 or more, you need a qualified appraisal. If the item is valued at $20,000 or more, you need to attach the appraisal to your return. (Warning: You get a full fair market value tax deduction only if the charity uses the item in its mission.)
8. Pass down heirlooms before you leave this mortal coil.
You can give away up to $13,000 a year to as many individuals as you’d like without eating into your lifetime exemption from federal gift tax. The $13,000 includes cash, stocks, or things: your jewelry, antique furniture, rare books, what have you. You can pass down a “lot of stuff” to keep it in the family at no tax cost, just be sure to keep it within limits.
Filing a gift tax return may be worth it in some cases if you’re passing on valuable family treasures your children will cherish. If, on the other hand, your kids don’t want that diamond broach, you’re better off selling it and giving them $13,000 one year and $5,000 the next year. If she simply wants to wear it occasionally, lend it to her and leave it to her in your will. If selling the necklace might entail a capital gain (see next pointer), that is yet another reason to hold on to it until you “move on.”.
Most personal items bought at retail depreciate enormously. The leather sectional sofa you bought for $15,000 might go for $1,500. A set of china you paid $8,000 for might go for a few hundred dollars. And if you have jewels and gems listed on your insurance policy at replacement value, you could get as little as 20-30% upon resale. The upside to depreciation: if you don’t have a gain, you don’t pay capital gains tax.
“When it comes to tangible personal property, that is everything that isn’t real estate, most people don’t know what the tax ramifications are,” says lawyer Joy Berus. “It’s a black hole.” If you sell personal property at a gain, you owe capital gains tax of 28%. If you can’t prove basis, the Internal Revenue Service assumes it’s zero. If you don’t report it, it’s fraud.
9. Remember to file the estate tax return.
Under current law, on Schedule F of the Form 706 estate tax return, your executor has to list the value of your household goods (this includes jewelry, furs, silverware, books, statuary, vases, oriental rugs, and coin or stamp collections). Any item valued in excess of $3,000 or any collection valued in excess of $10,000 must be appraised and listed separately. That’s another reason for getting rid of stuff before you die—provided, that is, it hasn’t appreciated.
Think there won’t be a need to file an estate tax return because your estate is less than the $5 million federal estate tax exemption? If you are the surviving spouse counting on a provision known as “portability,” where you can carry over part of your late spouse’s unused estate tax exemption, you need to file a return. Plus, the values for personal items reported on the estate tax return are typically used by beneficiaries to establish their cost basis.
10. What is Enough Stuff for you?
Hire a professional to help you achieve your ideal amount of stuff, determine the value of items you wish to sell, downsize and get rid of the excess or manage what is left behind. For a free estimate contact Dordy!