A few years ago when Forbes Magazine featured a story on downsizing, they turned to Evanston resident Richard Meliska for help illustrating the 10 tips set forth in the article. Meliska, who along with his wife Merrill Essex, owns Essex Estate Services, often works in the Oak Park and River Forest area, and recently came to town to speak about downsizing and help out with appraisals at the Oak Park-River Forest Historical Society’s annual appraisal event, “What’s It Worth?”
Meliska, a former banker and current certified personal property appraiser, and Essex, a former marketer (and currently a certified gemologist), began their business 18 years ago, selling Beanie Babies on eBay.
Eight years ago, they left the corporate world to work on their estate services full time. Throughout the Chicago area, Meliska speaks to, and works with, families looking to downsize, and he finds the following 10 tips a good starting point for what can be a very emotional time.
Tip 1: Accept that downsizing is tough. For most people, their house is their biggest possession, both financially and physically.
“It can be daunting to go through a lifetime of collections,” Meliska said. “People want to know how they can determine the actual value of items and how they can get it done efficiently and quickly.”
Whether it’s family members going through a loved-one’s estate after a death or a senior citizen looking to sell the large family home and move into a condominium, the process alone can be worrisome.
“The elderly may not want to be kicked out of their house for a weekend or see their possessions strewn about and up for sale, he observed. “People with a high net worth might be worried about privacy and liability with a traditional estate sale and opening their home up to strangers.”
The Essex approach allays some of those fears, as their estate sale services are off-site. Meliska and his team help home-sellers form three piles: trash, donations and stuff that will sell. They then take the items that can be sold to their warehouse and sell them over time, waiting for the best market value possible, depending on the item. It may be Ruby Lane for fine jewelry, or eBay for furniture.
Meliska said this approach helps maximize value returned. “We can take 6-9 months to sell everything, but we sell it to someone who values it, which has two benefits: the price realized is higher, and someone else will value the item as much as your family member did.”
Tip 2: Find trusted experts. The first step in the process is to find someone the family can trust to help make decisions. Whether that be a wealth management professional, an attorney, an auction house, or a real estate professional, a trusted relationship makes the process of downsizing move more smoothly.
Tip 3: Call an appraiser. Meliska said there are several different certifications for appraisers, and all should follow the Universal Standards for Professional Appraisal Practice. “The purpose of an appraisal is to put a dollar value on items,” he said, “either to sell them or for insurance purposes. Insurance value may not be the same as market value, and families should always be aware that any appraisal does not take into account sentimental value.”
Tip 4: Be wary of family lore. Family memories about an item can work two ways. Sometimes a story passed on for generations can enhance the perceived value of an item, but its actual value may not be that high. “On the flip side,” he noted, “kids are often de-sensitized to parents’ possessions. They want what their grandparents had, not what mom and dad had. Markets change. Right now, Victorian furniture is out, but the Dick Van Dyke style of furniture is in.”
Tip 5: Don’t throw away prematurely. “I kind of cringe when people call us and say, ‘We’ve already thrown out all of the junk,'” Meliska said, citing the story of a Flash Gordon sweater patch worth thousands that he found stuck in the back of a drawer. “You really need to have a trained eye to determine the value of something,” he added.
Tip 6: Call in an auction house. “A formal appraisal can be used for estate taxes or gifting. If you think you have items of value, it is always worthwhile to have an expert see the items. They need to see something and touch it to best determine its value.”
Tip 7: Donate and deduct. Besides being the green way to rid your house of items you no longer need, donations can also provide a tax benefit. “If your things still have a useful life,” he said, “they can be of value to charities.”
Tip 8: Pass down heirlooms before you die. “There are IRS guidelines to how much you can gift a relative every year,” Meliska said. “Passing things on to family is good for items that are heirlooms or will be cherished, and this is a good way to avoid probate tax.” Noting that tensions among surviving children can erupt when a parent passes away, Meliska said passing down heirlooms early can prevent family in-fighting later.
Tip 9: Watch out for capital gains. Meliska pointed out that an estate must report the value of items being passed on, and deception about the value of items can be considered tax fraud.
Tip 10: Remember the estate tax return. Any item over $5,000 in value, or a collection over $5,000, needs a qualified appraisal and has to be listed separately on a tax return.
Meliska enjoys the day-to-day relationships he builds through his business and said the personal connections are what makes it worthwhile.
“My take home from all of the places I visit,” he said, “is that I wish I’d known these people while they were alive.”