12 Million Classic Cars Are About to Transfer to a New Generation
The Great Wealth Transfer won’t just see money change hands, but automobiles as well.
Over a half trillion dollars worth of collectible cars are expected to be passed down via inheritance over the next 15 years, according to Bloomberg. Not all the Gen Xers and millennials who will receive these cars are happy about that, though.
The term “collectible car” refers to vehicles that are desirable for their heritage, performance, and design. Think something like a 1960s Ferrari GT, a first-gen Ford Mustang, or a McLaren F1. Specialty automobile insurer Hagerty says there are around 43 million vehicles in the U.S. that meet this criteria right now, valued at an estimated $1 trillion.
Data from the company suggests some 12 million of these car will be transferred via estate plans, gifts, and inheritances over the next 15 years, according to the financial news service. The value of these cars: around $570 billion. That represents just a fraction of the $90 trillion that the Silent Generation and baby boomers are set to pass on to their heirs as part of the Great Wealth Transfer, but its big figure nonetheless.
These cars may have represented freedom, achievement, and success to their current owners, but there’s every possibility that their next owners won’t look on them so fondly. Nostalgia only goes so far, especially when faced with the difficulties and costs that can come with an asset like a collectible car.
Cars cost money to maintain and store. An unnamed owner spent over $40,000 caring for a 1965 Studebaker that he inherited in 2005, before being forced to sell it for less than that earlier this year. And if a car hasn’t been properly looked after, there’s a chance a lot of work will be required to get it back in working order.
“At first I couldn’t believe it,” Miguel Cervantes, who now owns his wife’s grandfather’s 1984 Mercedes 300TD wagon, told Bloomberg, “but now it is with us, undergoing a full restoration.”
Tax issues can also come into consideration if an inheritor ends up selling a vehicle for more than it was worth at the time of its original owner’s passing. All one needs to do is look at the secondary market to see that there is a very real possibility of that happening. A special automobile, whether it’s a European sports coupe or American muscle car, can also lead to family discord and squabbles.
There’s nothing wrong with eyeing a relative’s beloved automobile. Just be aware that the car, as dreamy as it may be, could also come with an awful lot of baggage.
