Your Collection Deserves a Plan: Estate Planning for the Car Enthusiast

You know the feeling: the right patina on a dashboard, the numbers-matching engine, the provenance that tells a story. Your collection is the embodiment of a lifetime of passion for excellence. It is also a serious financial asset, one that adds meaningful diversification to your portfolio and deserves the same careful planning you give everything else. The collector car market has evolved into a sophisticated global arena where classic, exotic, and rare cars with provenance, originality, and desirability command prices that were unthinkable a decade ago. At this year’s Monterey Car Week, Gooding Christie’s sold a 1964 Shelby Cobra Daytona Coupe for $42.9 million, the most expensive American car ever sold at auction. Total auction sales for the week exceeded $750 million. These are not just cars. They are assets worth protecting.

If your collection is part of the legacy you wish to leave, start by having a candid conversation with your beneficiaries. Do they share your passion? If so, our goal is to help you to transfer the collection to them in the most tax-efficient manner possible. If they don't, that's perfectly fine, but a thoughtful disposition strategy is essential to ensure your beneficiaries receive the financial benefit of your collection, and your cars find the right next custodians.

The Tax Landscape You Need to Know

As of January 1, 2026, each U.S. citizen and resident has a $15 million exemption from the federal estate and gift tax, indexed annually for inflation. Married couples can combine their exemptions for a total of $30 million. This exemption is applied first to gifts made during your lifetime; any unused portion shelters assets remaining in your estate at death. Assets that exceed your available exemption are taxed at a federal estate tax rate of 40%. That means a collection valued at $20 million held by a single individual could generate a $2 million federal estate tax bill and, depending on where you reside, an additional state estate tax bill.

Why Timing Matters

A major benefit of making lifetime gifts is that you lock in the value of the asset at the time of the gift. All future appreciation is removed from your taxable estate. For an asset class like collector cars, where a single vehicle can double or triple in value over a decade, this strategy can save your family millions in estate taxes.

A Proven Strategy: The Collector Vehicle LLC

Estate planning for collectors means navigating a complex intersection of tax, valuation, and asset protection. Without a strategic approach, you risk costly surprises for your family. Here's one strategy our clients have used successfully:

Step 1: Form an LLC. Holding your collection in an LLC offers privacy, creditor protection, and control. Because purchase and sale records, including price and buyer identity, can become publicly available, an LLC with an opaque name shields your personal information. It also insulates your other assets from liability arising from an accident involving a vehicle in the collection. And the LLC operating agreement can include restrictions on how the vehicles are used and who they can be transferred to, keeping control within the family.

Step 2: Obtain a Qualified Valuation. Once the vehicles are titled in the LLC and the operating agreement is in place with appropriate restrictions, the next step is a formal valuation of the entity. The appraisal will account for the underlying value of the vehicles and for any discount attributable to the restrictions in the LLC agreement. For tax purposes, we recommend using "qualified appraisers” who meet specific IRS criteria.

Step 3: Gift LLC Interests Into a Trust. With the valuation complete, you can gift a portion of the LLC to your beneficiaries through a trust. Trusts offer both tax and practical advantages. A trustee can be chosen for his or her expertise in managing and, when appropriate, selling the types of vehicles in the collection. Many clients fund the trust with a mix of financial assets and LLC interests, giving the trustee a pool of capital to cover storage, maintenance, and insurance. The trustee manages the collection and makes distributions to beneficiaries according to the trust's terms.

Why a Trust? Assets held in trust are generally shielded from beneficiaries’ creditors. In a divorce, trust assets are ordinarily not subject to marital division. And a trust gives you the option to require that the collection always remain in the family, a powerful tool for preserving a legacy you spent a lifetime building.

As every collector knows, you are simply the caretaker of these mechanical marvels. You have made sure your collection has been cherished, maintained, and preserved during your lifetime. Now ensure that this part of your legacy is carried on for future generations of enthusiasts. Our private client group works with collectors across the country to build plans that protect, preserve, and pass on what matters most. Reach out to a member of our Private Client & Trust Group for a confidential, no-obligation conversation. We'd love to hear about your collection.