 
Planning Your Numismatic Estate:
Some Advice for the Advanced Collector and Investor
by David L. Ganz
Column 12 - May 11, 2000
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I enjoy going to a local coin club and talking about a hobby that has been very good to me over the last 40 years. As a past president of the American Numismatic Association, and as someone active as a member of the Board of the Industry Council for Tangible Assets, I receive many requests.
Frequently, I am also asked to speak at coin clubs - and I have found that as Mayor of the Borough of Fair Lawn, NJ, the 18th largest municipality in the Garden State, some civic groups are interested in having me speak on topics far removed from local politics. I usually choose coins, sometimes talking about the new Sacagawea dollar, or the new 50 state quarters, other times about rare coins.
Club meetings have often been the milieu for many of the columns that I have written over the last 35 years. Frequently, I blend careers - I practice law in New York City most of the time - and the topics on which I speak many times pertain to legal aspects associated with collecting.
Not long ago, I visited the Northern Valley Coin Club, an extremely active club with over 100 members in Bergen County, New Jersey's most northern suburb. My daunting assignment was to speak about numismatic estate planning, and how to plan for it in advance.
Without question, it was one of the most popular talks that I have given -- because when the half-hour presentation was done, there were 45 minutes of very active questions that followed. Interest was quite intense.
Appropriately, I thought that this month's column might share with you some of the questions and answers, since the generic nature of the forum made it applicable to virtually everyone that was there.
Q. Are corporations useful tools for estate planning?
A. Yes, of course they are. That's why the very rich use them so successfully. Let me give you a single example that is telling. By the time that Louis Eliasberg died, his collection evidently had been divided into shares. The gold portion was consigned in 1981-82 by the U.S. Gold Coin Corporation; the remaining portion was sold by Bowers & Merena a decade later.
Corporate ownership has distinct usefulness in collecting. Among them:
Corporations receive no 1099 forms when some of their assets are sold. Individuals may receive 1099 forms for some precious metal and numismatic sales under IRS guidelines for section 6045 of the tax code.
Corporations in the business of buying and selling coins typically have no sales or use tax to pay on their purchases. Some states have personal property or inventory taxes, but they are usually minimal.
Individuals eventually die; corporations can be of limited life, but typically are perpetual.
Taxpayers who die often have safety deposit boxes sealed; corporate boxes just change signatories from time to time.
If you collect rare coins that have appreciated substantially in value, they can't be cut in half to divide interests or profits -- a key to estate planning. Shares in a corporation can be given as gifts to children easily, conveniently, and without any more notice than making a notation in the corporation's minute book.
For example, suppose you bought a 1792 half disme in VF25 for $15,400 at an auction sale. If you lived in a state that charges sales tax or collects a compensating use tax of eight percent, your total cost would be $16,632.
Incorporating your collection for less than $300 yields an immediate tax savings of almost $1,000. But there are also other key benefits.
Suppose that you want your son or daughter to share in some of the appreciation of the coin. You're allowed to give them up to $10,000 a year -- tax free -- as a gift. Here, you could give them non-voting shares in your corporation.
The corporation could be capitalized so that shareholders benefit from appreciation of assets differently. Perhaps the parent gets their capital returned, first, but of any excess "profit", it is divided with a high percentage going to the non-voting shareholder. Net result: income is moved down a generation, almost painlessly, except for the capital gain.
Corporations can be formed inexpensively in Delaware, Nevada, New Jersey and several other states. Inc. Plan (USA), 818 Washington Street, Wilmington, DE 19801, Tel. (800) 462-4633 can do it for well under $300. Mention NumisMedia and receive a special discount.
A couple of words of caution if you do take a corporate route:
Have your accountant keep a set of corporate books and records.
Make sure your minute book is kept up to date, including an annual resolution by the directors and shareholders approving all acts of the corporation in the previous year.
Keep your franchise taxes paid.
Use a separate mailing address for the corporation from your personal assets.
Document your gifts to your children or others. If you do give more than $10,000, be sure to file a federal gift tax return. A small amount of tax now (for a small sum exceeding $10,000) can be your best investment, since it documents that the transaction is not a sham, and that a tax was paid on it.
There are surely other aspects of estate planning that every collector should keep in mind. Most helpful is maintaining an inventory, and a listing of costs of each item -- and current worth, if possible. This is especially true if you collect esoteric items that others could easily misevaluate.
Give detailed instructions as to how you think your collection should be disposed of. For example, "Sell at local coin show," "donate to ANA", "sell at Long Beach show or auction" or similar, if you think it will maximize your revenue.
The day of the unsophisticated revenue authority that ignores collectibles is gone forever. I can recall 20 years or so ago being asked by an official from the Department of Taxation & Finance in New York if I could give them a ballpark figure for a coin collection.
Now they subscribe to NumisMedia, and print periodicals, and know almost as much about coins as the experts do, themselves. For your estate to keep what you've built over a lifetime takes comprehensive planning.
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David L. Ganz
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