By Peter Mosiondz, Jr.….
Foolish is the individual who travels the highway of life without a Last Will and Testament. Just as imprudent is the numismatist who insists that he or she is in no need of a competent appraisal of their coin collection.
As most competent appraisals cost about the same as a last will it is surprising to us that more collectors do not avail themselves of the many benefits that the appraisal has to offer. The key word here is “competent”. We’ll explain a bit later.
Appraisals come in various categories, each with its own specific purpose. We’ll briefly discuss the five most common types; Gift, Probate, Sale, Insurance and Capital Gains.
Gift and Probate Appraisals
The Gift and Probate Appraisals are similar except for the fact that the former is used when one desires to identify the value of a numismatic gift made by a living person. This type of appraisal benefits the donor at tax time.
The Probate Appraisal, also necessary for tax purposes, is given to ascertain the value of a numismatic bequeathal made in a Last Will and Testament; in other words, by a deceased individual.
Both of these types of appraisals use replacement value as their criterion which will be described later.
Sale Appraisal
The Sale Appraisal is frequently used by collectors to prepare and protect their heirs for the inevitable day when the collection is to be sold. Unless one has discovered the secret method of transporting one’s collection to that great coin club in the sky, all collections will of necessity be sold at some point in time.
Sale Appraisals are also used by collectors who wish to sell part or all of their collection. Perhaps it is that collection of Middle Lower Volcano in which one has lost interest. Maybe it is a portion of a collection that needs to be sold to raise funds for an emergency. Perhaps it is a specialized collection that your local dealer is unable to handle. Whatever the reason, it is best to have a good idea of what the collection will bring before it is actually offered for sale.
Earlier we mentioned that key word “competent”. An appraisal done by the runny-nosed youngster next door who just happens to be the president of the school coin club is no more of a competent appraisal that one made by the local pharmacist just because he happens to be a coin collector. Neither is Uncle Ralph’s opinion valid because he “knows” your coin collection must be worth a small fortune. Why it must be because “Some of the coins are over fifty years old.” Performing a home-made appraisal with the values taken from a catalog or dealer price list is just as inadequate.
A competent numismatic Sales Appraisal is always made by a full-time professional numismatist who is ready to back up the appraised value with a check for the collection at the appraised price. In addition, the appraised price must be such that, if the collection were shown to another dealer, the appraised price would be readily paid without haggling.
Our suggestion is that the appraisal be performed by a member of the Canadian Association of Numismatic Dealers (CAND) or the Professional Numismatists Guild (PNG). This is not to say that other full-time or part-time dealers are not able to conduct an appraisal. It is just that the members of these two professional organizations have a very strict code of ethics to which they must adhere. And, these two organizations will stand on the collector’s side in the event of any unpleasant experience.
One final thing to remember in the Sale Appraisal is that the professional coin dealer depends on the purchase and sale of coins to ensure a continued livelihood. The appraised value should be one that allows the dealer to make a fair profit, not an exorbitant one.
Insurance Appraisal
The Insurance Appraisal is an important type of evaluation when purchasing a coin insurance policy with one of the widely advertised providers. Replacement value of the collection is the determinant factor here.
Replacement value is the amount that a collector would expect to pay to replace the coins right now if the collection were stolen. However, values can and do change frequently. The same can be said of the various series of coins. Half dollars may have decreased in value since you first obtained your examples. Another series may have become exceedingly popular and result in higher prices that when you acquired yours. A glance at the Trends Values in Canadian Coin News is strongly recommended.
The cost of this type of appraisal and the insurance coverage is modest for the piece of mind that is provided. Updates at least every two years are advised on the Insurance Appraisal. The fee for such updates is much lower than the initial appraisal fee. Just maintain accurate purchase and sales receipts. The Royal Canadian Numismatic Association (RCNA) offers reduced rate coin insurance coverage for its members.
Capital Gains Appraisal
This is the final type of appraisal in today’s discussion. Simply stated this appraisal is based solely on the monetary amount furnished by the collector using purchase receipts and invoices to obtain the figures. Seek only a competent appraiser with previous experience in this field. Tax laws differ widely in the countries where this article is being read so the best bet is to check with your tax accountant on any capital gains questions.
Summary
To sum up the basics, the Gift, Probate and Insurance Appraisals use replacement cost as their basis. The Sale Appraisal is the amount that the professional numismatist will pay the collector to enable a fair mark-up for resale purpose. Gift and Capital Gains appraisals are used to determine one’s tax liability.
Probate appraisals are necessary to determine the replacement value of the numismatic items in the estate, again to satisfy tax obligations. Insurance appraisals best protect the collector in submitting an insurance claim should the collection be stolen.
Appraisal Fees
Now that you are familiar with the various types of appraisals, let’s discuss what one might expect to pay for these services. I can only tell you what my fees are at the present time. How they compare to others is unknown although I trust that they will be competitive. The best course of action is to obtain two or three quotes and get a “feel” for the dealer before making the final decision.
My current fee for the Gift, Probate, Sale and Insurance appraisals is $150 per hour plus travel expenses if the appraisal is conducted away from my office. Yearly or bi-annual updates on the Insurance Appraisal are usually invoiced at $75 for an hour’s or less time. Travel again is additional.
My present fee for the Capital Gains Appraisal is one-half of one per-cent of the total valuation owing to the more simplistic nature of such an appraisal.
My fees are waived for established clients.
Conclusion
Do yourself a favour and have the appropriate appraisal performed for your individual needs. You will spare your heirs from a potential nightmare. You will also have the piece of mind knowing that when the collection is sold it will bring a fair price.
You may be surprised at just how many attorneys and executors fail to seek a competent (there’s that word again!) numismatic advice when handling the estate of a collector. In our long career, now in its sixth decade, we have had the misfortune to listen to dozens of horror tales of collections being sold for a mere fraction of their true worth.
Remember to have periodic updates and to maintain careful purchase and sale records of all numismatic items bought and sold since the initial appraisal date.
Until next time, stay well and enjoy your hobby.
