Overview of Estate Planning for a
and Surviving Spouse
Estate planning is "planning" in the truest sense of the word. It requires an overall set of goals as to how the estate
is to be managed, maintained or distributed. When a large portion of an estate's value is held in philatelic material, planning
for the effective distribution is essential to ensuring that the value is not lost to the survivor(s).
In the case of stamp collectors, often the surviving spouse or a personal friend will be the one to administer the estate;
in the case of philatelic holdings, administering an estate properly requires attention to detail. All estates require proper
administration and upholding fiduciary responsibilities. Even where there is a clear estate plan set forth, a key issue the
estate administrator must address for philatelic material is the valuation as of the date of death. This valuation is key
to the taxation and distribution of the estate, as well as the appropriate sale of philatelic material.
The careful planning of one's estate requires the preparation of a detailed inventory and valuation and a plan for distribution.
Overlooked areas of estate planning include a more global view of one's distribution goals and a plan for the possibility
of being incapacitated. Distribution goals must take into account the fact that the world will not be the same on the date
of death as it is on eve of planning. Another event often unplanned for is the philatelist becoming incapacitated to varying
degrees; this also requires planning so that the spouse or caretaker has instructions on how to deal with or liquidate philatelic
Estate planning for philatelic material requires an inventory, valuation, cost basis and clearly delineated goals for the
retention or liquidation of the material.
The plan must take into account how the material is owned, whether separately or jointly. If the material is owned jointly,
what form of joint ownership and what are the implications for estate planning purposes. Is the material owned as tenants-in-common,
joint tenants or as community property. [Note that nine states have community property laws: Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas, Washington, and Wisconsin.] The form of ownership can determine how property is transferred, Property
held in joint tenancy, for example, belongs to the surviving joint tenant(s) upon the death of any joint tenant(s). If there
is no will, some community property states will deem community property as becoming 100% owned by the surviving spouse.
Estate planning requires consideration of the value of the entire estate and gifts prior to death. The estate and gift
tax are unified, meaning that estates and gifts during lifetime [after 1976] are considered as a whole for tax purposes. United
States citizens or residents can give or leave $650,000 without estate tax. [This amount is slowly increasing to $1,000,000
by 2006.] Non-citizens / non-residents with U.S. property can exclude $60,000. Lifetime gifts over exclusionary amounts must
be included in the total for estate and gift tax purposes.
For gifts during lifetime, there is a $10,000 per year per donee per donor exclusion. This means that each person may give
any and all other individuals $10,000 per year each without depleting the $650,000 estate exclusion. There is also a marital
exclusion which is unlimited for citizen spouses. During the donor's lifetime, there is a $100,000 per year non-citizen spouse
In instances where the bulk of the estate is intended for the spouse, consideration should be made of the use of each spouse's
$650,000 exclusion, of marital deductions and of the intended distribution of the remainder of the estate upon the death of
the surviving spouse. There is an unlimited marital exclusion for citizen spouses. [None for non-citizen spouses, even if
legally resident in the United States. The equivalent of a marital exclusion can be set up for non-citizen spouse through
the use of an appropriately set up Qualified Domestic Trust.] However, if the estate is large enough such that more than $650,000
is likely to remain upon the death of the surviving spouse, it is important to consider the use of each spouse's exclusion
in order to reduce the overall estate tax paid.
Gifts during life are often used to reduce estate taxes. As mentioned above, gifts of $10,000 or less per donee per year
are excluded. If gifts are to take the form of tangible items, such as philatelic material, consideration should be taken
not only of the fair market value on the date of gift, but also of the "basis" of the gift. The tax basis for the subsequent
sale of a gift by the donee is the cost basis of the donor, simply speaking the amount paid for the item, unless that would
create a loss, in which case the basis is considered to be the fair market value of the item. In contrast, the basis of inherited
property is the fair market value on the date of death. Therefore, from a planning point of view, if there is a choice of
material to be given, it is better to gift the material with a cost basis closer to fair market value, reducing taxable "profit"
and to leave material with a low basis in the estate.
As a final note, it is important not to confuse probate avoidance with estate tax avoidance. Putting property into joint
tenancy or trusts is often set forth as a way to avoid estate tax, in many cases this may expediate or automate transfer of
ownership upon death, but the property will still be included in the estate valuation for estate tax purposes. Estates may
include transfers to trust within three years of death in the valuation for tax purposes. And joint tenancy property, although
automatically owned by the surviving joint tenant(s), is still included in the gross estate for tax purposes to the extent
that it was paid for by the decedent.
In closing, in planning one's estate, especially where philatelic material is involved, it is important to create an inventory
of one's holdings and a mental map of one's distribution goals prior to considering the most efficient and effective means