Are your heirs smarter than you?

It is a little soon to make New Year’s resolutions. I am going to bring up a topic that falls under the heading of resolutions, but more along the line of a life’s resolution rather than an ephemeral one to lose weight, give up smoking, or exercise.

I had a telephone call yesterday. The caller had a friend who has a very nice collection. The friend’s children have not the slightest interest in the coins.

What should the friend do along the lines of estate planning?

My reaction was that the coins should be sold while the collector is still alive and able to manage the process.

The collector knows what the coins are worth and how they should be sold to maximize value.

Sure there is a possibility that the coins could bring more money down the road when the kids would get them, but offsetting that possibility is the very real chance that they will mess up the eventual sale and get far less than the coins are worth.

It is better to sell the coins now, take the tax hit and let the remaining funds grow in other investments that the kids understand and will appreciate when dear old dad has passed on.

Inheriting coins is growing ever more problematic. Too many heirs are in a hurry to dump the “problem.” They do not want to take the time to extract the most value for themselves.

Or they are so eager to begin spending the legacy that they will take any low-ball offer just to get the cash. Apparently they look at inherited coins like a lottery ticket. They want cash now. They don’t want to wait for a more substantial flow of funds over time.

Dad ought to recognize this. He doesn’t have to be in a hurry to sell. He can make all the decisions and get it done. Even subtracting the potential tax hit, he will generate far more cash for his kids.

As a collector I find it sad that coins are not as appreciated as they should be, but considering the many other phone calls to my office from heirs where I have to tell them not to be in a hurry, I understand that an unfortunate outcome is much more likely when the coins are in the hands of people who have done nothing to collect them.

While it is heart warming to read about family collections and great collectors of history like T. Harrison Garrett and John Work Garrett, these multi-generational efforts are the rare exceptions.
Average collectors even in their most active years should have one eye on the exit door. We are all just temporary custodians of our collections anyway.

I think the greatest risks are for those collectors whose holdings are too big to ignore but too small to command a name auction.

If the collector is young enough, these holdings can be sold off over a number of years to minimize the tax liability. Some of the funds can even be plowed into new collections. A collector should never be entirely without coins, but reasonable planning and execution will prevent all those hard-earned assets from simply being frittered away by unthinking heirs.

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