Financial and Estate Planning.

This is a huge topic and the rules and options vary by country and jurisdiction.  Obviously, this does not in any way constitute legal advice.

Your “estate” is just a fancy word for all of your stuff, but mostly it focuses on your savings, investments and valuable property..  Over a lifetime we accumulate a lot of stuff, some of which is good (investments, valuable property, etc) and some of which is potentially aggravating (thousands of nails and screws and old tools that you hung onto because you “just might need them”, furniture, used cars, appliances, clothes, model collections, etc.)

There are two basic steps to dealing with an estate:

(1) build an estate
(2) plan for distribution of your estate

Building an Estate:

This comes down to spending less money than you make, and saving and investing the leftovers.  Over time this can grow to help you eventually retire and live off your savings.  These days, fewer employers offer guarantee retirement pension plans, so most of us are on our own (apart from whatever your government pensions might offer, which generally isn’t enough to live on).  Most employers will offer some form of defined contribution pension plan or retirement savings plan though.  These can be contributed to from payroll, and this is likely the least painful way to save – if you don’t see it, you don’t miss it!

Some basic things to keep in mind:  

• start saving early, but start – it is never too late!
• save a portion of your income – if you pretend you don’t have it, it is easier to live without it
• live below your means wherever possible – conspicuous consumption is so 1980!
• budget if you can: track what you spend and know where your money goes – it’s amazing how much is frittered away! 
• try and keep a cash emergency fund of three months living costs – housing, food, recurring expenses
• Invest your savings for the future by investing in:
• tax free investment plans  (TFSA in Canada) – anything you make on these is tax free, so it’s usually the first place to put your spare change  
• tax deferred retirement plans (RRSP’s in Canada, 401K’s in US) – usually contributions to these are tax deductible in the year you make them, but later when you start taking money out withdrawals are 100% taxable as income
• a non-registered investment account – no tax deduction for contributions, and any gains you make on them are taxable upon withdrawal in some fashion

These investment plans allow you to invest in pretty much anything that qualifies, including mutual funds, stocks, bonds, GIC’s, etc.  There are many online firms now that offer simplified, automated investment plans that can be tailored to your comfort level in investing.  

Make it automatic and painless wherever possible.  Financial institutions (banks, insurance companies, credit unions and the like) are happy to discuss your options with you.  Note that their fees may be higher than online, self-serve investment products but those fees may be worth it to you for the help they provide.

If your employer offers a group pension or retirement savings plan, look into it carefully.  If the employer offers matching contributions, then make sure you contribute enough to maximize their contribution!  If you don’t, you are just throwing away free money!

Plan to Use/Distribute Your Estate:

Lets assume that you’ve accumulated some assets (real estate, investments, household goods, massive collection of unbuilt model kits, etc).  While you are around and capable, you can manage these things yourself or with professional help, but what happens if you become incapable, or pass away?  What happens to your “stuff”?

We’ve broken this down into two phases:

(1) dealing with your stuff while you are still alive – use a Power of Attorney
(2) dealing with your stuff after you pass away – use a Will

Power of Attorney.

A power of attorney is a legal document that grants authority to one or more people to act on your behalf while you are alive.  If drafted properly it can remain in force while you are mentally incompetent – this depends on the laws where you live though.  It dies with you, at which point your will takes over, so it is best to do a POA and a will at the same time so things don’t get messed up.  The laws are often different by jurisdiction, so if you have sufficient assets, including real estate, it is usually worthwhile to consider engaging an estate lawyer.  Check online for free information and often simplified power of attorney and will kits that can deal with most non-complex situations.

When you are considering who to appoint as your attorney think carefully and honestly about who you know that would be able to handle it.  Being an attorney for someone can be a significant responsibility.  It can also be a temptation for them to take advantage of you, so be sure you consider the morality of the potential candidates as well.  Some of the most prolific scam artists are those that participate in local church groups, and take advantage of the congregation, so be very careful.  The usual person selected is a spouse, parent or sibling, but you might find out one or all of them are not the best option.  Maybe you’re not the best option for them.  If you plan on appointing someone to be your attorney, let them know in advance – they may prefer not to, and it is far better to know this before things get serious.  There are firms, including law firms, that will serve as attorneys under a power of attorney, usually for a fee that is a percentage of the value of the assets being managed.  Sometimes it’s worth the cost to hire a firm to do this.  Either way, it’s going to require you put some work into it, by actually planning, reaching out to potential candidates to be your attorney, and talking to others who may be impacted by your plans.  

Your POA is empowered to manage your assets and expenses for you while you are alive and, depending on the law in your area and the terms of the POA, can also make health related decisions if you are not able to communicate.  They are not supposed to sell your stuff unless it is necessary to fund your needs.  Often they get stuck in the middle of family battles over your stuff – it can be messy.  

It is important to note that just because you appoint someone as your POA, that doesn’t mean that you can’t deal with your own stuff anymore.  It just means that either you or your POA can deal with your property according to the terms of the POA.  For example, you could only authorize your POA to activate if you become mentally or physically incapable, or only for a specified period of time while you are away.  

It is important for the attorney to realize that they don’t have exclusive authority over your stuff and that you can still do things with it directly – especially if you are on the “edge” of not being capable.  Many elderly people are really not able to manage their financial affairs, but are still able to drive, shop, etc.  They can be prey to scam artists, so the POA should look into limiting the risks (low limit credit cards, dual authority required for bank account transactions, etc).

Make an inventory of your “stuff”, with a focus on things you think might be of some value.  Make an inventory of your model collection, and indicate which kits you think might be worth something and perhaps an assessment of value – just to give your POA a clue.  You can also list contacts for people who buy collections, or a contact at your local model club if you are a member.  This is an opportunity for you to take a good look at what you have and give some thought to getting rid of things you don’t absolutely love or will never build.  

When trying to sell your kits, try to be realistic on value.  Just because a kit is old doesn’t mean it is worth anything.    Also, if you want to minimize the work of selling and decide to sell a batch of kits, don’t expect as much as you MIGHT make by selling them individually.  People who buy kit collections or portions of collections are in business to make a profit after all – they will take the good kits with the unsellable ones, hoping that the profit on the good ones outweigh the loss on the others.   It’s a helluva lot of work.  

Wills

The laws on succession (transfer of your assets after you die) vary from jurisdiction to jurisdiction.  Most states have Succession Laws that establish what happens to your stuff if you die without a will – called “intestate succession”.  Although most of these rules are designed to cover the usual intentions (if married without kids, 100% goes to spouse – if married with kids, there are usually formulas as to who gets how much.  If no spouse/kids, it goes to parents or siblings, etc.  If nobody at all, it likely goes to the State.)

It is far better to make a will – that way you control what happens to your stuff.  Low cost, simple wills are pretty easy to do and there are usually simple forms available online, often with low cost advice services attached.  Revisit it every 3-5 years or whenever a major life event (marriage, children, divorce) occurs.

You will have to appoint one or more executor(s), who are responsible for finding all your stuff, valuing it, selling or distributing it and fulfilling your bequests.  They will also have to do your estate taxes and if the estate takes awhile to settle, they could be dealing with it for some time.  The same issues that arise with finding a person to be your POA apply here.

Your assets generally will fall into the following categories:

– real estate
– investment and bank accounts
– valuable property – art, antiques, collectors cars, private jets, classic aircraft, etc
– Stuff – furniture, clothes, hobby materials – the detritus of day to day life.  

This last one is usually where the “stash” comes in (unless you have a complete set of Wingnuts Wings kits, in which case they probably qualify as “valuable property”).  

The Stash.

Whether you, your POA or your Executor, eventually someone has to deal with the results of your lifetime of devotion to this hobby.  Very few people will ever love your “stuff” as much as you did, and it can be very difficult for someone unfamiliar with the hobby to figure out how to fairly deal with the stash.  It is ALWAYS better if you can save your family/friends the chore by winnowing down your stash on your own terms before they are stuck doing it.

Sure – decades of “cool stuff” becomes overwhelming.  It’s literally hard to think about how to approach it, so we put it off. The longer you do that, the higher the risk that it won’t ever be done on your terms though, and the more likely that your poor personal representative will be saddled with the task. 

So – how to go about making it easier?  Start by being honest with yourself on a number of fronts:

– will you ever build this kit?
– are you keeping it for memories/sentimental value only?
– have your modelling interests changed?

The answers to these questions might help you decide on next steps – keep to build/keep to smile/sell/donate.

It’s natural to replace older kits with newer ones.  I’m not likely to build that Monogram Devastator or HiPM Vindicator.  I have better kits.  Those should go on the sale block, but I won’t expect to get more than a nominal amount for them.

Sell things you don’t want to build.  You won’t build it all.

Share the hobby with your kids or grandkids – help them/let them build some of those kits you likely won’t ever get to.

Donate to veterans or kids clubs, but do not give them terrible, difficult kits. We want to relieve stress and encourage the hobby!

Figure out how much of your collection you will ever actually get to.  Be honest.   Consider developing a “number” of kits you think you will actually get to, and clear out the rest – keep the “Sweet Sixteen” and as you build one, maybe acquire a new one!

Tools to keep from being a hoarder (collector is understandable, hoarder is toxic).

– Budget- some people do well with a budget. Even if it’s just X amount per show.
 – – You could also budget your appraised cap for a collection.
– Cap numbers of kits.  Our eyes are bigger than our bench.
– Wait.  That Tamiya P-38 will always be available.  You can wait to get it.
– Limited run resin kits or similar subjects may be more important for short-term purchases.

We all will buy new stuff.  It’s fine.  It keeps the hobby alive.  It’s important to be honest with our ambitions, though.  It’s also important – and fair and good manners frankly – to try and sort out things as best you can while you are able to do so, and don’t leave the messy job to your poor POA or executor who may well have no background on the hobby at all!

Some other references

http://www.scalemodelsoup.com/2015/06/the-challenge-of-pricing-pre-owned.html

http://www.scalemodelsoup.com/2017/08/your-stash-when-you-die.html

http://www.scalemodelsoup.com/2019/11/its-not-sellers-market.html