The Collector's Handbook

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The Collector's Handbook THE COLLECTOR’S HANDBOOK HANDBOOK THE COLLECTOR’S The Collector’s Handbook 13th Edition Tax Planning, Strategy and Estate Advice for Collectors and Their Heirs James L. Halperin and Gregory J. Rohan d The Collector’s Handbook e f The Collector’s Handbook Tax Planning, Strategy and Estate Advice for Collectors and Their Heirs James L. Halperin and Gregory J. Rohan Edited by Noah Fleisher, Brian Keagy, Steve Lansdale, Meredith Meuwly and Steve Roach Dallas, Texas g By James L. Halperin and Gregory J. Rohan Edited for 2020 by Brian Keagy, Meredith Meuwly and Steve Lansdale. Copyright 2000, 2004, 2007, 2008, 2009, 2011, 2012, 2013, 2014, 2015, 2016, 2018, 2019, 2020 by James L. Halperin and Gregory J. Rohan All Rights Reserved. Reproduction or translation of any part of this work without permission of the copyright owners is unlawful. Written requests for permission or further information should be addressed to: Ivy Press 2801 W. Airport Freeway Dallas, TX 75261-4127 This publication is designed to provide accurate and authoritative information with respect to the subject matter covered. It is provided with the understanding that neither the authors nor the publisher are engaged in rendering legal, accounting, or other professional advice. If legal advice or other expert assistance is required, you should seek the services of a competent professional. Choose the members of your financial team wisely, and don’t be afraid to pay for good advice; it will save you money in the long run. You will likely need a CPA, a lawyer, a financial planner, and an insurance agent to execute the planning recommended in this book. Encourage your entire team to work together; a financial plan is only as good as it is holistic. Please remember that tax planning is an ongoing process and not an annual event. Collectors have special needs, and tax laws affect different collectors differently. ISBN: 9781-63351-467-6 Manufactured in the United States of America © 2020, Revised Edition Copyright Cover Design by Chris Britton, 2020 h A True Collector’s Mentality “My wish is, so that my drawings, my prints, my curiosities, my books, in a word, those things of Art which have been the joy of my life shall not be consigned to the cold tomb of a museum, and subjected to the stupid glance of the careless passer-by; but I require that they shall all be dispersed under the hammer of the auctioneer, so that the pleasure which the acquiring of each one has given to me, shall be given again, in each case, to some inheritor of my own tastes.” From the will of Edmond de Goncourt, 1896 “…helpful summaries about care of collections, security, and tax pitfalls.” – The Philadelphia Inquirer “Minimize inheritance headaches and heartaches… Experts’ tips for winning encounters with coin dealers and the IRS.” – The Centinel “To those of us in the business of helping remove obstacles from the financial paths of clients, The Collector’s Handbook is a valuable resource I would think that any advisor would want to have in their library.” - Jeffrey Turner, Certified Financial Planner™ professional, President of Chattanooga Estate Planning Council “…your heirs deserve knowledge and truth about your holdings. Your use of this book should help, and—especially for those of you with a valuable collection—a copy for your heirs would not be amiss.” – COINage Coin Collector's Yearbook “…deserves to be in the hands of any collector of coins, serious or frivolous. It gives excellent advice for maintaining records, car- ing for, safeguarding and for disposing of a numismatic collection. Dealers would do well to recommend it to their customers – after reading it themselves.” – Col. Bill Murray, Noted Columnist “…by far the best book written on how to ensure that your coin collection is never sold for pennies on the dollar. A book I highly recommend to all my clients.” – Dale Williams, Professional Numismatist “How comprehensive is this book? I put it with my collection and told my daughter Sara to read it when it comes to handling my coin estate.” – Fred Weinberg, Past President of the Professional Numismatists Guild “In summary, this small paperback book contains a wealth of information for collectors at all levels of the hobby. You can read it over a weekend, and I would urge you to share it with your potential heirs. If nothing else, place a copy on top of your collection, with important (to you) sections highlighted. Your heirs will be glad you did.” – Mike Thorne, Writer. Coins Magazine Estate Planning Made Easy, June 3, 2009 “Must reading for most of today’s collectors.” – Coins Magazine k “A wealth of sound and practical information, written in a clear and con- cise manner. Must reading for every collector!” – Leroy Van Allen, Numismatic Author and Morgan Dollar Expert “…It is for everyone in numismatics and is even a ‘must have’ for those who may become heirs, but lack the know-how of what to do next. Senior citizens, like myself, will be especially happy with the interesting stories of estates, etc. … EVERYONE should own it if coins are involved in their activities. I highly recommend this book…” – Lee Martin, Founder of the Numismatic Literary Guild l The first edition of this book, titled The Rare Coin Estate Handbook, received many of the comments and endorsements listed above, and won the Robert Friedberg Award from the Professional Numismatists Guild: Best Numismatic Book of the Year. Now rewritten for all forms of art, jewelry and collectibles, the 7th Edition of The Collector’s Handbook received the “Extraordinary Merit” award from the Numismatic Literary Guild in 2013 . m Fr. 1218e $1,000 1882 Gold Certificate PMG Very Fine 30. Sold for: $600,000 | January 2018 Front Cover: Rolex, Very Fine and Rare 14k Gold Ref. 6241 “Paul Newman” Cosmograph Daytona “John Player Special”, Circa 1969 Sold for: $804,500 | October 2018 1885 Trade Dollar Finest of Five Examples Known PR66 NGC Sold for: $3,960,000 | January 2019 Contents n Foreword vii Acknowledgements xi Introduction xiii PART 1: ADMINISTERING YOUR COLLECTION Chapter 1 – Recordkeeping 3 Chapter 2 – Caring for Your Collection 9 Chapter 3 – Safeguarding Your Collection 17 PART 2: ESTATE PLANNING FOR YOUR COLLECTION Chapter 4 – All in the Family 31 Chapter 5 – Division of Assets 41 Chapter 6 – Should You Bequeath Your Collection, or Sell During Your Lifetime? 51 Chapter 7 – Tax Options for Estate Planning 61 Chapter 8 – Collectibles and Charitable Giving 83 PART 3: EVALUATING YOUR COLLECTION Chapter 9 – Third-Party Authentication and Grading 95 Chapter 10 – Having Your Collection Appraised 101 PART 4: SELLING YOUR COLLECTION Chapter 11 – Selling Your Collection Through Outright Sale 139 Chapter 12 – Selling Your Collectibles Through an Agent 147 Chapter 13 – Selling Your Collection at Auction 155 Chapter 14 – Etiquette & Tips 165 APPENDICES Appendix A – Organizations for Collectors 176 Appendix B – Insurance Companies Offering Specialized Coverage for Collectors 178 Appendix C – Appraiser’s Societies, Agencies and Brokers 179 Appendix D – Third-Party Grading Services 180 Appendix E – Selected Publications for Collectors 181 1885 Trade Dollar Finest of Five Examples Known PR66 NGC Sold for: $3,960,000 | January 2019 Forward ● o Foreword WHY WE COLLECT THINGS y friend John Jay Pittman did not start out a wealthy man. Slowly Mand with dedication, he assembled an incredible coin collection. He accomplished this through relentless study and at the cost of a significant portion of his limited income as a middle manager for Eastman Kodak, supplemented by his wife’s income as a schoolteacher. In 1954, John mortgaged the family house to travel to Egypt and bid on coins at the King Farouk Collection auction, and he demanded many more sacrifices of himself and his family over the decades. He passed away in 1996 with no apparent regrets, and his long-suffering family deservingly reaped the rewards of his efforts when the collection was sold at auction for more than $30 million. But why did he do it? On our website, HA.com, we auction many different types of collectibles; what started in 1976 as a numismatics business is now the largest auction house founded in America — with annual sales exceeding $825 million in 2019 in categories ranging from meteorites to Hermès handbags. Most of our more than 1 million registered client/bidders collect in more than one area, which we can determine through online surveys, free catalog subscriptions, and multiple drawings for prizes throughout the year. Our clients pursue many different collecting areas, and for many different reasons. One fervent collector of historical documents refers to his passion as “a genetic defect.” The founding father of psychoanalysis Sigmund Freud, a renowned collector in his own right, thought that collecting was really about sex: “The core of paranoia is the detachment of the libido from objects,” he wrote in 1908. “A reverse course is taken by the collector who directs his surplus libido into an inanimate object: a love of things.” But more likely it’s basic human instinct: a survival advantage amplified Forward ● xvi by eons of natural selection. Those of our ancient ancestors who managed to accumulate scarce objects may have been more likely to survive long enough to bear offspring—and people who owned shiny objects may have had an easier time attracting mates. Even today, wealth correlates with longer life expectancy; and could any form of wealth be more primal than scarce, tangible objects? While the thrill of the hunt and a passion for objects — whether it’s Lithuanian first-day covers or Alberto Vargas paintings — is what motivates and excites collectors, there are, alas, some housekeeping chores that must be tended to in order to assure that you derive the most benefit from your collection.
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