Americans often prefer to stay busy. When we are not working, many of us turn to hobbies to keep us engaged and productive. We spend hours each day on our hobbies and leisure activities. Over the course of a lifetime, this time adds up to a significant investment.
Our hobbies, passion projects, and pursuits may also represent large investments of money, resources, and emotions. Therefore, they should often be included in an estate plan.
Whether you are a collector of classic cars or comic books, an artist or craftsperson with a studio full of valuable equipment, a musician who owns prized instruments, or someone who never outgrew their vintage toys and board games, estate planning helps to preserve your cherished items and make them part of your legacy.
Hobbies Growing in Importance to Americans
We define ourselves largely by how we spend our time. For many Americans, wasted time amounts to wasted potential.
According to the US Bureau of Labor Statistics 2023 Time Use Survey, Americans spend about five hours a day on leisure activities and hobbies. Another survey of Americans taken during the COVID-19 pandemic found that 6 in 10 had adopted a new hobby as they were left with more spare time and nowhere to go. Common new hobbies ranged from baking or cooking to reading, arts and crafts, and photography.
While some of our pandemic pastimes have already fallen by the wayside, others are likely to persist because there is an inherent payoff when we gain new knowledge or learn a new skill and continue to improve at it.
That payoff may be more than just the personal satisfaction of mastering a skill. Nearly half of those who took up a new pandemic hobby turned it into a side hustle that earned them extra money. And an additional one-quarter of those with new hobbies said they hoped to turn their new hobby into a form of income in the future.
When Passion Turns Profitable
Happiness may be priceless, but many of the things that make us happy have a price tag attached to them.
Maybe you did not start a hobby or collection to make money. Tales abound about boyhood baseball card collections and antiquing finds that turned out to be worth millions of dollars. Coins, comic books, stamps, books, toys, action figures, records, cars, dolls, furniture, and even vintage bakeware have commanded impressive prices that, in some cases, belie their appearance and original purpose.
Other hobbyists and collectors approach their passion with pecuniary interests squarely in mind. Collecting sports memorabilia, for example, has exploded into a billion-dollar industry akin to the fine-art market. In 2023, the collectibles market as a whole, driven by online marketplaces and digital auctions, was estimated at nearly $500 billion and growing.
For others, a private passion can turn into a life’s work, like it did for Jim Irsay, the NFL’s Indianapolis Colts owner, or Joel Platt, a renowned sports memorabilia collector. These men have gone to great lengths to preserve their collections for posterity. Irsay takes his diverse collections of historic artifacts, featuring items from sports, pop culture, literature, and American history, on the road and shows them off for free. Platt’s collection is currently housed in a showcase museum in Boca Raton, Florida.
Like collectors, many of the most famous artists started out pursuing a passion they never expected to get rich from, only to have their works later sold for a small fortune.
While he was alive, Vincent van Gogh sold a single painting in 1890 for a meager 400 francs, or about $2,670 in today’s US dollars. In 1990, one of his paintings sold for $83 million at auction.
Then there’s fashion icon Coco Chanel, whose inspiration to design clothes for women out of practical necessity launched one of the world’s best-known clothing brands. Her first fashion success came from a dress she made from an old jersey. Today, the Chanel brand is valued at around $20 billion.
Protecting and Preserving Your Passion
Most of us may not reach the heights of Van Gogh, Irsay, Platt, or Chanel in our hobbyist or artistic pursuits. However, that does not mean our passions are without value and that we should not take steps to ensure our sweat equity is an investment in our legacy.
Estate planning is essential not only for financial and family considerations but also for those with serious, lifelong projects. The things that define you in life can continue to define you in death when you plan ahead properly. Here are some steps you can take now so that your loved ones know exactly what to do with the things that matter most to you.
- Inventory and document. Start by creating a detailed inventory of the items in your collection or related to your hobby. The inventory should include descriptions, photographs, certificates of authenticity, provenance (ownership history), conditions, insurance information, care instructions, and other documentation that can help an estate executor or trustee manage and distribute them. Have physical and digital copies of your inventory and related documents stored in safe locations (e.g., a safe deposit box or encrypted cloud storage) that you have ensured key loved ones can access after your passing. Review and update your inventory regularly. A good time to do so is when you update your estate plan every few years or when significant changes occur in your or your family’s life, or to your financial situation or your collection.
- Get a professional appraisal. Obtain professional appraisals to find out the current market value of what you own, including the final product and the equipment and raw materials used to make it. For example, if you have a shop where you make furniture, get the furniture and the woodworking machinery appraised. Hobbyists might have vintage or rare supplies and materials, such as reclaimed wood, which can also be valuable.
- Talk to your family. A common estate planning mistake is to put everything in writing but never discuss your plans with the people who will be affected by them. For example, your loved ones might be aware that you wrote in your spare time or have a large book collection, but do they appreciate how much these works mean to you? Do they know what inspired your love of the written word, your personal journey with it, and how it helped to define you? Unless you share these details with others, the things that were the most personally meaningful to you might be regarded by your loved ones as just more stuff they must go through when you die.
- Decide how to distribute. Do you want to give what you have in its entirety to a single person, divide it among multiple loved ones, donate it to charity, or sell it, or do you prefer some combination of these options? Your decision will be based on the items themselves and whether there is anybody who might want them. A family member or friend with the same interests might be a good fit. A loved one who does not want them might end up selling them anyway, so you can sell them now, make plans for your estate or a dealer to sell them and distribute the proceeds following your death, or make a lifetime gift (or series of gifts).
- Put your wishes in an estate plan. All your conversations, preparations, and evaluations could be for naught if you do not clearly and legally describe your wishes in an estate plan. Suppose that you have your treasured comic book collection professionally appraised and documented. You have this information stored in a locked box, and you regularly update it. There is only one problem: you never formally documented your plan for your collection in a will or trust. You may have casually discussed your plans with family, but absent a formal estate plan, there is no guarantee it will come to fruition.
Remember that you can get creative with your estate plan. Although you may never get to display your artwork at a museum, for instance, you could arrange to have a private viewing of your art or collectibles for friends and family in addition to, or instead of, a traditional funeral or celebration of life arrangement.
Celebrate your life’s work however you want—just make sure to plan ahead and get everything in writing.
A Serious Passion Deserves Serious Planning
The things we create and collect form a core part of our identity. They mark our existence long after we are gone. You cannot take it with you. However, you can make it a part of your legacy with an estate plan.
Only a written estate plan makes your wishes legally binding. Do not be the person whose family finds a valuable collection in a dusty corner of the attic and does not know what to do with it, fights over who should receive what, or overlooks its importance and throws it away or donates it.
You put serious time into your hobby or collection. Keep the passion alive and inspire the next generation with an estate plan that gives your life’s work the treatment it deserves. Talk to one of our estate planning attorneys today.
Call Santaella Legal Group, serving all of California, at (925) 831-4840, or reach out to us here.