Include Your Family in Your Plans

"Planning for your eventual passing will always be unpleasant, but the best time to start planning for it is today."

We seriously doubt any adult in America has not read or heard of the importance of making a will, and yet every year, tens of thousands of Americans who would have benefited from wills die intestate (without a will). The reason is simple: nobody likes to think about death, much less actively prepare for it. It may be even worse for collectors. As much as people hate to contemplate their own demise, collectors are equally loath to consider the sale of their collectibles. Perhaps they equate the two events.

Since you're reading this book, we hope that you are at least willing to think about the ultimate disposition of your acquisitions. Whether you intend to collect to the end, or sell next month, much of the same advice applies. We have helped thousands of people dispose of their collections, and more than 20% were heirs who knew next to nothing about the collectibles. That is a statistic that we would like to change. You should too.

Involve Your Family

Many collectors keep their families in the dark about the scale and nature of their collecting. We understand that the reasons for this may be myriad and viewed strictly in the present sense, they may very well suit your situation and preference. Taking a longer view, however, have you considered what effect an untimely demise might have on your collection? What would your heirs' expectations be? We have seen both extremes.

One call from Widow Smith brought us to a house where we found a dining room table covered with boxes of world coins to a height of three feet. From a distance, it was one of the most impressive collections that we had ever inspected: all matching coin boxes, all neatly labeled with the countries of origin. The widow told us that her husband had been a serious collector for more than three decades, visiting his local coin shop nearly every Saturday. He then came home and meticulously prepared his purchases, spending hour upon happy hour at the table in his little study. We opened the first box, and couldn't help but notice the neat and orderly presentation: cardboard 2x2s, neatly stapled, crisp printing of country name, year of issue, Yeoman number, date purchased, and amount paid. We also couldn't help but notice that 90% of the coins had been purchased for less than 50 cents, and the balance for less than one dollar. The collection was box after box of post-1940 minors, all impeccably presented. All essentially worthless.

We asked the widow Smith if she had any idea of the value of the collection. She replied that she knew that rare coins were valuable, and since her late husband had worked so diligently on his collection for so many years, she hoped it would enable her to afford a nice retirement in Florida. It was obviously a very delicate moment. We had to carefully explain that we were neither interested in the coins for auction, nor for direct purchase. Her husband had enjoyed himself thoroughly for all those years, but he had never told her that he was spending more on holders, staples and boxes than he was on the coins. Her dreams of comfortable retirement dashed, we put her in touch with two dealers who routinely purchase such coins. (She refused to consider an offer from the local dealer who had sold most of these coins to her husband.) Mr. Smith's fault was not in his collecting, for his love of these coins was manifest, but in his failure to let his wife know exactly what he was doing.

We more typically encounter widows and heirs on the other extreme. When your spouse spends $50,000 or $100,000 on rare coins or other collectibles, you generally have some knowledge of those purchases, but not always, and not always to the full extent of the purchases. Rare collectibles at this level are definitely an asset that needs to be given appropriate consideration. Unfortunately, however, because they are a hard asset, and one that easily falls outside of prying eyes, some heirs make their distributions without first gathering all of the facts.

Miss Jones was the younger of two sisters who were dividing their father's estate. Dad had left Germany in the early 1930s. As historians will note, this was not particularly a great time to immigrate to America, although it was certainly an excellent time to be leaving Germany. Dad brought to America two collections: antique silver service pieces and his rare coins. The coins were mostly sold to establish his mercantile concern in Iowa. He prospered despite the hard times, and he spent the next thirty years rebuilding his collection of Germanic/European coinage. At the same time, he kept expanding his collection of silverware lovingly created by 17th & 18th century German silversmiths. We knew every aspect of his collecting history, because he had left a meticulous record on index cards. Every coin, every piece of silver was detailed with his cataloging and purchase history. Even his own daughter was moved to compliment his passion for keeping such detailed records.

After his death, his daughters decided to split his collections between themselves. They added up the purchase values of each of his collections. We do not think it was coincidental that the two collections came out just about equal. The older sister/executor had some small knowledge of antique silver, and since she wished to keep all of the elegant heirloom tea service for herself, she decided to keep the silver and give her younger sister the coins. She was definitely not interested in splitting the heirlooms. She sold the non-family silver pieces through a regional auction house, and bragged of realizing more than $200,000 from her father's $27,000 investment.

The younger sister came to us with just one box of his coins. Her father's records for that box indicated a cost less than $2,000, but knowing the years when he had collected, we were anticipating at least a few nice coins. We were, however, totally unprepared for the numismatic feast which was laid before us: pristine coins of the greatest rarity—wonderful, gorgeous coins, most of which had been off the market for at least twenty years. His "$2,000" box was worth more than $150,000, surpassing her wildest expectations.

Miss Jones then produced the record cards for the rest of the collection, and we offered to travel back to Iowa with her the same day. When we finished auctioning the coins, she had realized more than $1.2 million.

One more example of what can happen when information is not shared, and we warn you, the ending is a bit of a shocker. The wife of a deceased coin dealer once called us to consign one million dollars in rare coins from her late husband's estate. Since her self-employed husband had been ill for some time, this asset represented a significant portion of her entire retirement funding. We eagerly picked up the coins, and had already begun cataloging and photographing when we received an urgent phone call from her attorney. The coins had to be returned immediately. It seems that her husband had been holding the extensive coin purchases of his main customer in his vaults, and he had neither informed his wife nor adequately marked the boxes. Most of her $1 million retirement asset belonged to someone else. Failure to adequately inform heirs doesn't happen just to collectors.

A final example, one that really distressed us, demonstrates that partial planning, no matter how well intentioned, can't always guarantee the desired results. A collector with a sizeable collection divided his coins equally (by value) between his adult son and daughter, with instructions that they should seek expert advice before selling. The daughter came to us, and we were pleased to report that her father had done an excellent job of dividing the collection — as expertly as we could have advised. The daughter's coins were worth in excess of $85,000. After she signed the Consignment Agreement, she told us the rest of the story. Her brother had "sold" his share eight months earlier to a local pawnbroker for less than $7,500. Her father hadn't shared his knowledge of the asset's value with his children for fear that his son would spend the money foolishly. Instead, her brother basically gave it away.

So, what should you do to prevent such problems?

Get Your Family Involved — One Way or Another

One of the greatest joys of collecting involves not just the objects of interest, but the friends we make along the way. If passing your collection to the next generation is desirable, you will want to organize an orderly transition. If they just aren't interested in sharing your love of the collectibles, you will have to decide whether to dispose of the collection in your lifetime, or pass that task to your heirs. If the latter, your family should — at a minimum — have a basic understanding of your collection, its approximate value, and how you want it dispersed.

Important Questions to Be Discussed

• Are there heirs who will want the collection from a collector's standpoint?

• Where are the objects kept?

• Where is the inventory of the collectibles kept?

• What is the approximate value of the collection?

• Do any of the articles in your possession belong to someone else?

• Is there a dealer or other expert that you trust to provide guidance to your heirs?

• Is there a firm that you and your heirs will wish to use to aid in the collection's disposition after your death?

In summary, talk with your family about your collection. The horror stories beginning this chapter are all true and they won't be the last. If, for whatever reason, you cannot bring yourself to share this information with your whole family, pick one trusted individual— perhaps the person you are considering to be your Executor. If even that won't work for you, please take the time to write detailed instructions, or simply make notes in this book, and leave it in your safe-deposit box or wherever you keep your valuables. The next few chapters will further define your options and finding help to implement them. Whatever your choices, the written instructions can be either part of your will or, at the very least, a document kept with the collection inventory. Your heirs will thank you for this final attention to detail.

TIPS FOR HEIRS: This chapter doesn't address inheritance issues, but communications can be initiated from any direction. Do you have a parent with a collection? Certainly it is an issue that requires tact, but such a discussion may save considerable heartache and misfortune later. Additionally, if you know in advance that your spouse or relative has named you as Executor in a will, a few conversations about the collection will make your job much easier.