How To Protect A Wine Collection
If you are contemplating starting a wine collection but are not sure where to begin, continue reading.
Wine collecting can be as simple as investing in one bottle purchased in a child’s birth year to share when that child turns 21 or buying in quantity when your favorite wine is going out of stock. It is passion and love for wine behind each selection.
Buying wine is an investment in pleasure. Search for wine that you look forward to one day enjoying with yourself or someone else. Keep reading to help you decide how to progress in your passion and protect a wine collection.
There are wine collectors whose passion is deep and wine collecting is a natural hobby. It can also be an investment, as a bottle could cost a lot depending on its history and documentation details.
For instance, in 2010, three bottles of 1869 Chateau Lafite-Rothschild were sold for $230,000 per bottle. In 2011, two bottles of champagne were found in a 17-year-old shipwreck. Both were then auctioned for about $78,000 each. Depending on the story and documentation behind your wine investment there is money to be made.
Insure your investments
Recently, it was reported that wine thieves distracted wait staff to steal a rare $407,000 bottle of wine from the restaurant’s cellar. If you are seriously investing in your wine collection make a point to talk with an insurance agent.
Many wine connoisseurs assume homeowners insurance adequately covers their collections. Be sure to check your homeowners policy and that is covers common threats to wine collections, such as:
- flood damage;
- mechanical breakdowns that affect heating, cooling and humidity control;
- a power outage that could spoil wine;
- and breakage that occurs during shipment.
Pointers In How To Protect A Wine Collection
Like many passions, you need to invest in them to nurture and grow them. Unlike children wine isn’t improved by the amount of time you spend with them. You will be spending money not only on buying wine but caring for your wine as well. A wine collection is more than buying a bottle and putting it away in your closet. Wine collecting demands proper storage, documentation, insurance, and security. A cellar investment will be a must with wine provenance and the resell price.
Choosing wine should come from its rarity, history, and significance. A bottle is valuable if it belongs to a historical event or if the wine was made in the year related to something significant. Its location also matters. For instance, it could be from a place where they produce quality wine such as France and California, perhaps even Texas or England. Supply and demand of a particular bottle of wine is another factor in price appreciation potential.
You should keep all the essential documentation of a bottle including the receipt if you bought it, the title text when you got it from an auction or anything that serves as proof of how you got it. Keeping the details and even the box is essential in any collection but especially with a wine collection.
Storage Or Cellar Matters
If you have several thousand bottles, or plan on eventually acquiring that many, you need to consider building a wine cellar. Think of a space that you can both insulate and vent and regulate the temperature and control the humidity. Electrical upgrades will need to be made as needed to accommodate the unit. Think about a lockable door and/or a security system and some aesthetics such as racking, lighting and other interior features to show it off properly with furniture, art. I found a DIY wine cellar on YouTube that I want to share with you below. Chris Arneson walks you through the cellar he built in his basement.
Every bottle should have a notes book where you will jot down every detail about it. The distinguishing marks on the bottle or anything worthy of knowing. Also, if you taste the wine, you should make some notes regarding the taste, the date, or whatever detail relevant to it.
Regular Appraisal Matters
It is essential that you’ll have your wines checked for a recent appraisal. It is crucial in the event of pursuing insurance following an accident such as fire or other calamities. You have to know and have a record of the appraisal recently made so that you would not have a hard time with the process.
It is crucial that you can distinguish a genuine old bottle with an old wine inside. Be wary about taking temptingly suspicious deals. Be knowledgeable about your chosen collection by doing some research and reading about other collectors’ experience. It is hard to know everything in the wine world, have a partner in your wine collection or connect with other wine collectors to share knowledge.
Starting a wine collection is not an easy decision to make overnight. There are reminders that should be taken seriously to be successful in it. Wines seem to have a life, and you just don’t buy and stock them. Be delicate, passionate, and dedicated to giving your wine collection the treatment you would give to a child. And once you have your wine collection you need to protect it.
Add your wine collection to your will
Unfortunately, you cannot take the wine with you when you pass. However, taking just a few preliminary steps during life can go a long way toward ensuring that your collection passes in accordance with your wishes and without any unnecessary hassle for your personal representative.
Consulting with an attorney, such as Jacque Nikodym of JN Law in San Antonio, TX, will help you take steps to preserve and pass on your wine collection. Special consideration must go to unique assets, such as a wine cellar. Unlike many other items of personal property, a wine cellar represents time and effort and has both sentimental and fiscal value.
Steps to take before your death to preserve your wine collection
Having a plan of care for your wine collection in the event of a major life event such as your death or incapacity is important to the preservation of your wine collection. Entire wine collections have been lost due to preventable circumstances such as malfunction of wine cellar controls.
Your plan of care should include detailed information about each wine bottle, how to maintain the wine cellar, and most importantly who to call if the wine cellar’s electricity or humidity settings are not functioning properly. This information should also be kept in one obvious place, ideally with the inventory and authentication documents, and your personal representative made aware of its location.
Select a beneficiary for your wine collection.
Another option is to leave your collection to charity, though you will want to confirm that the charity has interest in a gift that requires some work to be monetized. Once you find such a charity, this can be a great way to support an organization that you care about while also making a deductible donation.
Also, you may want to give the intended recipient an idea of the size of the wine collection he or she will receive so that space can be cleared in advance. At the very least, instruct your personal representative to do so in order to avoid a truck load of wine showing up without proper preparation.
Alternatively, there are plenty of reasons that your beneficiaries may be better served by the cash value of the wine cellar than the wine itself. If, for example, your potential beneficiaries do not have an interest in wine or would be inconvenienced by having to pay an estate tax or having the ongoing expenses, an auction house is a great option.
Your personal representative can arrange for the sale of the contents of your wine cellar. You can then distribute the proceeds as you have indicated in your estate plan or you can include a plan for sale of your wine collection in your plan of care. If this is an appealing option, initiating a relationship with an auction house now is advisable as it will provide your heirs with a contact who already has a sense of your collection.
Estate planning for your wine collection
After determining your desires for the disposition of your wine collection, the final step is to ensure that your estate plan reflects your decisions and wishes.
Although the creation of a trust might sound like a natural option, passing your wine collection on by way of a specific bequest might be best for your estate planning needs depending on your circumstances. A trust for management of your wine collection would only work in very specific circumstances. For one to be effective, the cellar itself must be somewhere that it can be maintained (not, for example, in a house that will be sold, or in a different state); funds must be set aside for the maintenance; and your trustees must be willing and able to take that on. Further, each time a bottle of wine was consumed, it would need to be appraised to determine any capital gains implications.
Instead, you can pass your wine cellar simply as a specific bequest in your existing estate planning documents (a will or revocable trust, specifically).
If the considerations above are taken into account during life, the collection will pass smoothly and all of your carefully selected wines will pass as you desire. Now, that’s a reason to cheer!
Sources: jnlawtexas.com, pexels.com, pixabay.com