An often-overlooked area of estate planning is the financial management of a family’s art, antiques and other collectibles. But the financial advisor who works this into his practice can help his clients save millions of dollars, potentially end up with additional assets to manage and get to know the next generation.

Some estimate that collectibles represent 10 percent to 15 percent of the $41 trillion in wealth that is expected to change hands over the next 40 to 50 years as baby boomers leave their estates to children and other heirs, says Michael Mendelsohn, founder and president of Briddge Art Strategies, which works with financial advisors, law firms, trust departments and CPA firms to help them craft strategies for managing their clients’ collectibles.

“Probably 50 percent of people worth $10 million have collectibles,” he adds. “We find that a lot of people who don’t even think they collect things have $1 million to $1.5 million worth of collectibles in their world.”

Many high-net-worth individuals use the “empty hook” method of estate planning, according to Mendelsohn. This basically means that the art is never insured or exhibited, just hung on a wall. When the owner passes away, the kids come in and simply remove the paintings from the wall. “I’ve seen houses where kids names are literally on the wall behind the hooks,” he says. “Even the most sophisticated collectors often handle about half of their collections this way.” But this kind of asset transfer basically amounts to illegal estate-tax fraud, which has no statute of limitations, and, with penalties and interest, the heir could ultimately lose up to 82 percent of the value of the item.

There are a number of things to consider when managing a fine arts collection, says Hugh Freund, a partner at Patterson Belknap Webb & Tyler, a New York law firm. For one, you have to do a fair amount of homework to understand what the family wants to do with the collection—for example, whether it will be donated to a museum, put in a trust or limited partnership, used to set up a private foundation or liquidated for cash needs.

Once that’s been determined, you need to do due diligence on how to value the collection. For example, the major auction houses are not always the best resource, Freund says. In one recent case, a client had a major collection of folk art, and when he tracked down the individual representing the artist, he found that the value was 30 times greater than that suggested by the auction house.

In addition, there is a new market for collections today that wasn’t around 10 years ago, and that’s eBay. “eBay is an incredible way to get rid of things,” Freund says, citing a collection of pipes that one client had. “No one thought they were worth anything because he had chewed on them,” he says. But they sold easily and for a nice sum on eBay.

One way to reduce the estate-tax burden on a fine art collection is to put it in a family limited partnership and then value it at a discount for gift-tax and estate-tax purposes. But under this strategy, the individual or family will lose control of the asset itself, and oftentimes a collectible is something the family wants to use personally—to hang on the wall. “So, unless you really have bought something for investment purposes, people can be reluctant to put them in a vehicle that restricts their use of it,” says Freund.

Another option is to create a foundation with the collectibles by incorporating them. “Here you have to determine the intent of what you are creating, decide how to administrate it and whether to keep it for personal use or allow for public viewing.” The greater the public access you grant to that foundation, the greater your tax break.