One of my clients had lost her father‚ a few months earlier․
He was a good man․ A careful man․ He worked in construction for 40 years‚ the house in Brooklyn was fully paid for‚ he had a small retirement account‚ and kept a shoebox in the back of his closet․
Inside the shoebox were thirty-two American Gold Eagle coins․
Nobody knew they were there․ Not his wife․ Not his children․ Not his estate plan‚ because he didn't really have one‚ just a will drafted twenty years before listing the house‚ the savings account‚ and "personal property․"
Two words․ Personal property․
That's all that stood between his family and what became several months' worth of legal-and-tax problems that cost far more than the coins were worth in time‚ stress and attorney fees․
And I want to tell you that story because this is a theme I've seen play out with cash‚ with jewelry‚ with stock certificates in filing cabinet drawers‚ and more recently with cryptocurrency on hardware wallets that a family can't get into․ The asset has changed․ The problem hasn't․
What Happens When Nobody Can Prove Where It Came From
When these coins were brought to me by my client's daughter‚ the first question I asked myself was not 'what are they worth?' but 'when did he buy them?'․
She didn't know․
There were no receipts․ There were no bank records․ There was nothing in the ledger․ The coins had been sitting in that shoebox for what could have been five years or twenty-five․ Nobody could say with any certainty․
That matters a great deal tax-wise․
Upon inheriting an asset‚ by convention‚ the inheritor receives a stepped-up basis‚ meaning the owner's basis is reset to the current fair market value of the asset at the time of the owner's death․ This important feature of estate law means a family can inherit a house worth $80‚000 and in short order (and with virtually no tax liability for capital gains) they can sell it for $700‚000 without paying taxes on most of that appreciation․
The only way to get a stepped-up basis is for the asset to be recognized as being in the estate‚ and for that‚ there must be documentation․ Whether it be in a will or a trust or financial statements or some other document‚ there must be some type of record․
The reality of the situation was there were 32 gold coins in a shoebox․ There were no receipts of their purchase‚ and the only thing it said in the will was "personal property․" So they had a genuine dilemma․ They can't prove that these coins were held long-term and not bought immediately before one sells them‚ and the IRS doesn't fill in those blanks․
The daughter then hired a tax adviser‚ who had the ability to reconstruct reasonable times for the valuations․ Expensive‚ too․ Needlessly․ It could've been avoided․
Why This Happens More Than You'd Think
The majority of my clients are middle-class families from Brooklyn‚ Queens and Staten Island․ Many of my clients are first-generation Americans or children of immigrants from other countries․ There is a cultural thread that runs through a lot of these cases that my elder law practice has been built around understanding․
I don't want to stereotype my customers․ Just because they come with physical assets and not parked in the banking system doesn't mean they're reckless․ Merely‚ those who have been brought up in countries where banks have failed‚ governments have seized property‚ where that instinct to have something tangible‚ something private‚ meant you actually had something real valued those things and brought those instincts here․ They bought gold and kept their cash․ They held onto things they could touch․
Of course‚ they didn't record a second of it‚ because that's what documentation felt like: putting a target on something they had worked so hard to protect․
I know what you're feeling‚ but the law does not allow for it․
When those assets are passed on to the next generation‚ the same privacy concerns that were once so important become a complication upon death․ What was private becomes invisible‚ and invisible assets create visible problems․
The Executor's Problem
There is another level to this that is often missed‚ which is the liability that falls on the executor personally․
It is still your job as an executor to find and account for everything‚ even if it is found in shoeboxes‚ even if it is cash stuffed behind ceiling tiles․ This includes gold coins‚ silver bars‚ and any other tangible asset or collectible of value․
Accordingly‚ an executor or administrator who fails to account for an asset (even unintentionally) may be liable to the estate for its value․ If the executor or administrator distributes assets to heirs before paying creditors and undisclosed or undiscovered assets would have been sufficient for creditors‚ the executor or administrator may be personally liable․
That's not theoretical risk․ I've seen it happen before․
In regard to the situation with the gold coin‚ and with her family‚ my client was put in that position․ Under her father's old will‚ she was the executor․ She had found the coins but had no idea whether her father had outstanding debts that might also lay some claim․ She had no way of knowing what the estate was worth․ She was doing the best she could in the dark to do right by her family‚ as best she could․
Nobody should have to inherit that situation․ It's the kind of thing that turns grieving into a legal nightmare at the worst possible moment․
The Assets That Create the Most Risk
Physical gold and silver is the classic example‚ but there are many others․ Here's where I see undocumented assets do the most damage to estates and estates' teams․
Cash
A large amount of cash kept on hand in the house can be a problem for an estate undergoing Medicaid review. Undisclosed cash in the estate could trigger an estate recovery action if a Medicaid benefit is applied for. It could also present questions of financial abuse of the deceased, which is the last thing a family needs to be dealing with at that stage.
Jewelry and Collectibles
Watches, vintage jewelry, coins, stamps or works of art may have considerable value, but will rarely (if ever) be mentioned in an estate plan. Without an appraisal and some documentation, that value is questioned by the tax authorities, by the other heirs, and by creditors.
Cryptocurrency
This is the most recent and the most acute version of the problem. Digital assets held on hardware wallets or non-custodial online wallets may be impossible to access upon the demise of the owner, and if not disclosed to the estate, may not even be known to be in existence. I've heard stories of tens of thousands of dollars of cryptocurrency going missing because the family didn't know the wallet address and nobody could find their seed phrase.
Old Stock Certificates
Paper stock certificates from companies that merged with, were acquired by, or changed names of other companies may contain unclaimed value. Sometimes they're worthless, and sometimes they're worth more than the family expects. But there's not really a clear process through that.
What Documentation Actually Looks Like
All this paperwork is not rocket science․ It's just something most people don't think to do until it's too late․
A solid inventory of an estate's assets should include every physical asset of meaningful value: what it is‚ where it is located‚ approximately when it was bought‚ and what it cost or what it was worth at the time of purchase․ An estate inventory does not have to be a formal legal document․ It can be a spreadsheet․ It can be a letter kept with the will․ Or it could be a note in a safe deposit box․
The point is that it exists․ That it's findable․ That it connects the asset to the person who owned it and gives the executor something to work with․
For gold or silver coins or bullion‚ the claims to the stepped-up basis are‚ of course‚ documented in the purchase receipts․ Even absent the receipts‚ a record of the purchase (e․g․‚ a handwritten note saying "bought 10 Eagles in 2008 at approximately $900 each") can provide the basis․ Nothing is perfect but something is always better than nothing․
In cryptocurrencies‚ it might mean writing down wallet addresses‚ exchange accounts‚ and access information and keeping it in a secure place accessible to someone who can be trusted․ A hardware wallet sitting in a drawer without the seed phrase is not an asset․ A box which nobody can open․
Where This Fits in a Real Estate Plan
And this is why I push so hard on the asset inventory conversation with every client I work with‚ not just the clients who obviously have physical assets: you'd be surprised how many people don't think of themselves as having important physical holdings until we start talking through it systematically․
A good estate plan is more than a will and a power of attorney․ The plan is a complete inventory of everything you own that is documented in a way that provides your family with of the tools they need to manage your death․
The shoebox in the closet doesn't have to be a problem․ The problem is when nobody knows the shoebox is there‚ or what's in it‚ or what it's worth‚ or how it fits with the rest of the structures you've built․
Your family is going to be grieving․ They shouldn't also be doing forensic accounting․
If you have physical assets that aren't properly documented in your estate plan — gold‚ silver‚ cash‚ collectibles‚ crypto‚ anything — give us a call․ That's exactly the kind of conversation we have every day‚ and it's almost always simpler to fix than people expect․
Start there․ Do it now‚ while you can․
If you're not sure whether your assets are properly documented, that's the sign you need to have this conversation. We work with Brooklyn, Queens, and Staten Island families every day on exactly this, and the first step is a free consultation where we go through everything you own and make sure nothing is invisible.
Schedule your free consultation with Alatsas Law Firm today.
