Collection Management | Resources For The Collector
Bluewater is able to draw on a panel of expertise and offer the most up-to-date advice about collection management to help you through your Collecting Journey.
Coins - Grading vs. Non-Grading
Should you have your coins graded?
The process of grading a coin is subjective and even the most experienced professionals can disagree due to individual interpretation. Grading by a third-party company allows coins to be examined on a 1 to 70 numerical scale, authenticated, properly labeled and encapsulated in clear plastic holders or slabs.
There are three factors in determining the value of a coin: rarity, condition and demand. Many collectors find grading a valuable tool in validating pricing at auction, in encapsulating a coin to preserve its integrity or presenting an objective opinion of value for a buyer or seller.
Below are two questions to help you determine whether grading is for you.
- What is the purpose of your collection--investment, hobby or both?
- Are organization, condition maintenance and value important to you?
At Bluewater, we advise collectors to consider the purpose of their coin collection to determine our recommendations of whether to grade or not.
For your reference, leading grading companies include--but are not limited to-- Professional Coin Grading Service (PCGS), Numismatic Guaranty Corporation (NGC), Independent Coin Graders (ICG) and ANACS.
Fine Art – Is your collection secure?
When thinking about security for your art collection, ask yourself what most concerns you—theft, home security or damage? Perhaps…
As an art collector, you’re focused on the genres, rarity, history, styles and artist type (living or deceased) that represent the unique personality of your collection. It’s easy to forget about how we protect those pieces.
Security is but one piece of a puzzle involving risk management of an art collection. Other pieces include inventory management, temperature & humidity management, display best practices, media awareness and transportation management.
- Technology platforms are transforming the way we think about private collection security. There are a wide range of features from smoke to humidity detection to motion sensors for individual pieces that can be managed from a mobile device. For your reference, security companies include, but not limited to: Avente – Art Security, Art Guard, Galleryguard and more.
- Preserving the integrity of art pieces is very important, which is why conservators, curators and restorers recommend optimal humidity and temperature conditions. 1. Humidity 45 – 55% 2. Temperature 68 – 72 degrees Fahrenheit
- Displaying pieces of art is rewarding in many ways, yet assessing display risk is seldom on the collector’s mind. When assessing your display space, be sure your checklist includes such items such as proper light exposure, visibility from the street and sidewalk, types of hanging equipment (D- rings are recommended), and household traffic exposure. Remember to weigh the risk if you’re thinking about hanging your valued piece above an active fireplace.
- Media awareness involves any media platform writing articles, taking videos or photos of your art collection with the intent to publish. In today’s technology savvy society, information is easily accessible, which means thieves have access to this information as well. Although flattering to have a publication show interest in your collection, consider the risks.
Here’s a conversation to have with your CPA after 2016 taxes are put to bed and she has come back from well-needed R&R. The topic is long term capital gains on the sale of art that you’ve held for one year or more. Did you know that art and collectibles are taxed at 28%, unlike long term capital gains on stocks, bonds and real estate.
Add to that the health care surtax of 3.8% that applies to net investment income above a certain amount, which includes gains from the sale of art. This is a simple concept that is often overlooked by art collectors today. So much attention is paid to potential savings on estate taxes by making lifetime gifts that the basics are often overlooked.
Bottom line, it’s a good idea to compare the transfer tax saving that is achieved by a lifetime gift with the cost of potential capital gains taxes that might be due.
What? You don’t know your cost basis?
Why specialty insurance for your valued items?
Typically, many homeowners’ and renters’ policies don’t provide adequate coverage to appropriately cover the full value of a collection, protect newly purchased items, items in-transit and more.
The full value on fine arts and collectibles coverage generally ranges from $500 to $5000 for a homeowner’s policy without additional protection such as a floater or rider. Even with adding a floater or rider for an additional premium, homeowners’ policies tend to limit the level of exposure.
In case of a loss, the difference in payouts between a homeowner’s and specialty product is often dramatically different because homeowners’ policies base their payouts on the documented purchase price of an item or offer an actual cash value policy (cost of repair or replace minus depreciation). However, a given item could have been purchased with the goal of amassing a valuable collection that appreciates over time. Prized items like these need to be properly insured.
Specialty insurance, by Bluewater, includes an Agreed Value Policy (guarantees the policy will pay the full amount – with no depreciation – in case of a total loss). Further protecting the value of a collection, Agreed Value includes: ‘All Risk’ board coverage, items in-transit, items stored away from the home (such as in an office or storage facility), and newly acquired items for up to 90 days. Additional coverage benefits such as discounts for security features and fire alarms or items kept in a UL-rated safe are also offered.
So, how do you choose an insurance expert to guide you in protecting your valuable collection? Here are some things to consider:
- Proper Value protection – Review the details of the coverage to make sure your getting Agreed Value. It’s the only way to be sure you get the full value for your collection.
- Coverage Limits – Choose a company that does not cap limits on a single item. (Especially important for coin collectors)
- Flexible Usage – Storage in multiple location, attend shows, club functions, travel or exhibit pieces related to your Collecting Journey, then you want to have a policy that aligns with your collecting habits, activities and lifestyle.
- Your insurance expert has experience, expertise and passion when it comes to your prized collection.