To sell or donate? Disposing of family treasures

The late Clyde Gilmour’s family managed to solve in short order what many would have perceived to be a problem of gigantic proportions when the CBC icon died on Nov. 7, 1997.

Within a week of his death, the legendary broadcaster’s collection of 10,000 records that for years had crowded out just about everything else in the basement of his west Toronto home was donated to his national broadcaster employer of more than 40 years, presumably in return for a government tax receipt.

Three months earlier, Patrick Colgan, a 52-year-old Ottawa biopsychologist- turned- administrator, suddenly without a job after 27 years, found a new owner in Algoma University College of Sault Ste. Marie, Ont., for 10,000 scientific volumes he’d amassed over his lifetime.

He also received a government receipt that will reduce his tax payments over the next five years at a minimum, freeing him to pursue a new career in Niagara-on-the-Lake, Ont., as a bed-and-breakfast operator.

All of which gets me around to my own perceived “problem”: A collection of 2,500 Canadian historical volumes, many rare, that now occupy two rooms, part of a garage, and threatening to invade the rest my Toronto home.

Don’t get me wrong. I bask in the company of my books. Not only are they virtually part of the family, they’re a rich source of research for a retired journalist who still dabbles in writing.

What’s troubling me, however, is their sheer bulk. Unlike a stamp collection which can be stored in two or three boxes, my collection forces me to think twice about moving to another house or city. And when my time comes, if there’s no guide to them, is there anyone in the family who knows their true value?

Preparing for their disposal, whether that event occurs during my lifetime or beyond, is a simple but time-consuming task. But only for me. Quite a different story facing my surviving spouse who has only a passing knowledge of the economics and marketing customs of the rare book trade.

Experts in the field differ on a number of points in how a family should prepare for the disposal of a prized collection. But they’re united in recommending a catalogue of the collection be made during the lifetime of its compiler, plus an indication of who is bequeathed what.

Stephen Barrett, senior will and estate planner at Royal Trust Corp., in Toronto, says without such a document, how is it possible for a trustee to dispute any family member’s contention that “this item is mine” or “Dad told me one night he was leaving his collection to me?”

Receipts are another set of items Barrett would like to see in company with any collection of books, stamps or coins. Assuming, in my own case, my spouse is left with the job of selling or otherwise disposing of my 35-year collection of books, she would have three main choices:

• Selling the lot to a rare bookdealer.
• Finding a university or other institution authorized by Canada’s Heritage Department to accept materials in return for a tax receipt.
• Leaving them with a corner bookshop.

Options one and two are the only real alternatives for anything of substance — say books worth $80 or more. Most of what might retail for $40 or less is really material for the corner bookshop.

Next page: The value you can expect …

The value you can expect varies from an antiquarian bookdealer according to the dealer you select. To leave room for profit, some may offer only 25 per cent of the fair market value of an item. But offering 50 per cent of its value is the more general rule.

Finding a new home for the collection in an institution is the more certain way to go, and will return something close to 50 per cent for the entire collection. The problem here is finding an institution prepared to pay to have the collection appraised before agreeing to take it.

Take Colgan’s case. Assuming each of the 10,000 volumes he turned over to Algoma University College was worth $15 — or a total of $150,000 — and that his taxable income was $48,000, here’s how the federal government’s “gifts in kind” legislation would work: Since Algoma College is a designated charity, federal law permits it to accept gifts in return for a full 29 per cent tax credit (together with half that much again that automatically comes from most provinces) to the donee from Revenue Canada — in this case split into five annual instalments of 20 per cent of the total value.

Each year for four years (assuming his finances don’t change) he could reduce his taxable income by 75 per cent or $36,000, thus saving him roughly $15,000 annually in tax. And together with another $5,000 in year five, Colgan’s gift, based on the assumptions above, would have saved him close to $65,000 in tax — about equal to 43.5 per cent of the collection’s appraised value.

Here are some of the tips he offers:

• The collection should have a focus.
• It should be catalogued in detail.
• It must be laid out in way that allows the appraiser to locate the books.

Stamps are another matter. The market today is the strongest its been since the halcyon days of 1981.

But trading in stamps is different than buying and selling books. A conventional rare book dealer is likely to offer the same product in Vancouver as any of his counterparts in Winnipeg, Montreal or Halifax. But not necessarily so with stamp dealers, who specialize in country of origin, themes (birds, national figures, etc.), commemoratives, stamps on covers or even metered postage marks.

Barrett at Royal Trust remembers this well. “One deceased Toronto client instructed us in his will to sell his stamp collection through a certain dealer. As things turned out, the dealer was out on the West Coast. It turned out that he offered a far better price for the collection than anyone locally. But how would we have known — or how would his spouse have known — had he not left specific instructions?”

If you’re a spouse of someone who has just died and left you a collection of something of value — even a few items — think about the recent case of the John McCrae medals. Last year, a Winnipeg man sold three service medals of Lt. Col. John McCrae, the Guelph, Ont.-born author of In Flanders Fields to a local dealer. The dealer paid him a reported $145 for the set. Later, along with McCrae’s Boer War medal, the set, together with a mixture of military, fair and exhibition medals that belonged to McCrae’s father, brought the dealer $530,000, minus commission.

The moral of this story? Do your homework ahead of time.

Better still, do it now.

Plan ahead to help your heirs
Ask Revenue Canada for its free, easy-to-read handbook, Gifts and Income Tax from the department’s Client Services Directorate, 400 Cumberland St., Ottawa, Ont., K1A 0L5. Or think about a branch of government that would be anxious to receive your treasures. For example:

• The National Archives of Canada, 305 Wellington St., Ottawa, K1A 0N3, whose interests range from papers and documents of national significance to videos, old photographs, papers and artifacts dealing with economic, scientific, ethnic, women’s issues and other matters.
• Also, other groups that include The Canadian War Museum, The Canadian Museum of Nature, Canadian Museum of Civilization, the various provincial archives, almost any branch of the Crown, including the Canadian Broadcasting Corporation or a university (Queen’s University in Kingston, Ont., for example, has a wide-ranging collection of early New Democratic Party papers).