by Mike Thorne, PhD
Have you given any thought to what will happen to your coin collection when you’re no longer around? Are any of your children interested in coins? Your spouse? Other relatives?
And how much is your collection worth? Should it be sold to a friendly dealer you have done business with? Sold at auction? Is there a guide that might help you answer these questions?
If you have a valuable coin collection, then it would be worth your while to procure a copy of The Collector’s Handbook: Tax Planning, Strategy and Estate Advice for Collectors and Their Heirs. Penned by James L. Halperin, Gregory J. Rohan, and Mark J. Prendergast, The Collector’s Handbook was published by Ivy Press, Inc., in Dallas, Texas. You can find it for sale on Amazon and eBay.
Although the first edition of this book was devoted exclusively to coins, over the years Heritage Auctions has branched out considerably. Today, they bill themselves as one of the largest auction houses in the world, offering collectibles such as coins, comics, currency, art, wine, luxury handbags and watches, sports memorabilia, and books.
The book is divided into four parts: “Administering Your Collection,” “Estate Planning for Your Collection,” “Evaluating Your Collection,” and “Selling Your Collection.”
The first part opens with a chapter stressing the importance of a good inventory, something I have preached for years. I cannot tell you how many collections I’ve been asked to appraise that didn’t have inventories.
An inventory can be as simple as something you keep with paper and pen, or it can be considerably more elaborate. Google “coin inventory programs,” and you will score more than 7 million hits. Although there’s undoubtedly a ton of duplication, there are also some useful finds. One that I saw was a Coin Inventory Log Book, available from Amazon for $5.99 (at the time of this writing.)
From my experience, one of the best and least expensive coin inventory programs is the one that’s available from Heritage Auctions. In fact, it’s so inexpensive that it won’t cost you a cent; Heritage gives it away. Of course, you do have to register on the Heritage site, but that seems a small price to pay for a powerful coin inventory program.
Not only does “My Collection” allow you to indicate each of the coins in your collection, but you can also include the amount you paid for a coin, when you bought it, from whom you bought it, whether or not it’s certified, any identifying features, and so on. You can even include a picture of the obverse and reverse of the coin.
Perhaps one of the best features of the site is that for each item in your collection, there’s a table of values, both wholesale and retail. Even better, these values change over time so that there’s always a current amount your coins and the whole collection is worth.
The remainder of Part 1 is devoted to caring for and safeguarding your collection. For coins, you should consider having them in sealed inert capsules (e.g., slabs). If they’re not stored, then be sure they’re kept in a low-humidity environment. If you live in the Deep South, as I do, then the low-humidity environment may be hard to achieve.
In terms of security, you may want to keep your best coins, or perhaps all of your coins, in a lockbox at your bank. Since the bank is undoubtedly air-conditioned, chances are good that it provides a relatively low-humidity environment for your collection.
If you keep your collection at home, The Collector’s Handbook suggests having a monitored security system, a home safe, and ways to camouflage your valuables. There are also tips for transporting your collectibles and for obtaining insurance.
Part Two of The Collector’s Handbook examines “Estate Planning for Your Collection.” Of course, a lot of this discussion depends on the value of your collection. Perhaps the best way to approach it is to sell your collection during your lifetime, as it is much simpler to divide cash among your heirs than to decide which relative gets which part of your collection. There’s even a chapter in this part that looks at whether you should sell your collection during your lifetime or bequeath it to a museum or other nonprofit institution.
There are tax ramifications for different actions, and it’s worthwhile making yourself aware of these before deciding on actions to take concerning your collection. Chapter 7 looks at “Tax Options for Estate Planning.” Here, Heritage recommends that “...you engage the services of a competent legal professional... and a tax advisor, preferably a CPA.”
Part Three provides a brief look at issues surrounding “Evaluating Your Collection.” As you would expect, there’s an examination of third-party authentication and grading. One interesting question asks what you should certify. Because there is a significant cost to have coins certified, the book offers the following advice: “. . . the finished product [certified and graded coin] has to be worth more than the raw (ungraded) item, plus the certification fee.” In other words, if your coins are worth less than the cost of certification plus any added value of being certified, then you should not have them certified.
The final section looks at “Selling Your Collection.” Various options are considered, such as selling through an outright sale (e.g., to a trusted dealer or dealers), selling through an agent (i.e., hiring someone to handle the sales for you), or selling at auction. Again, determining the best approach depends on the value of your collection and whether you have rare and expensive coins that are best sold at a well-publicized auction.
Although the 10th edition of The Collector’s Handbook contains a wealth of valuable information for collectors, it’s not exclusively geared toward the coin collector. If you don’t have any valuable collections other than coins, then a better source of similar information can be found in an earlier version of this handbook: The Rare Coin Estate Handbook, published in 2000. Whichever version you choose, you’ll be better informed after you read it. In addition, you might want to keep a copy with your collection, so that your heirs can profit from its information.
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