Thomas H. Ruggie developed the Destiny Collectibles Scorecard after realizing that he had not made adequate plans for his own sizable collection of sports memorabilia. Ruggie, founder and CEO of Destiny Family Office and host of the Significance of Wealth podcast, advises families on handling collectibles as one part of his practice.
The Scorecard is meant to help families identify gaps between how they would like to handle their collections and what they are actually doing. Like all long-term plans, it should be re-evaluated periodically. You can view the Scorecard, below.
Ruggie talks about the 10 categories listed on the Scorecard and what questions families should address for each:
Acquisition: Do you treat your collectibles as an investment?
There’s no right or wrong here, but to me, the perfect mindset is that somebody is passionate about what they’re collecting, and they also realize that there’s an investment component to it. It’s the best of both worlds to have it be a passion as well as an investment.
We’ve built up a resource document for each of these 10 steps. The document for acquisition lists places that you can go to acquire collectibles of all sorts. What I’m passionate about is the sports memorabilia, so we’ve got various sports memorabilia auction houses in the resource guide. But we also have auction houses in there for cars and watches and wine and art.
Documentation: Do you have documentation to confirm — and a process to update — documentation of your collectibles’ authenticity, value and cultural significance?
For most collectibles, documentation is extremely important. For example, I own the fighting trunks that Muhammad Ali wore when he fought George Foreman. Without proper documentation, who’s to say that those are the actual trunks? It’s important not only to have the documentation, but also have a process for maintaining it.
Valuation: Do you have a process to update and record the value of your collection?
It’s important for multiple reasons to keep up with the updated valuation of collectibles — whether it’s going up or down. Some things go down in value, but it’s still important to update the valuation. For example, if you have a multiple-source collection, the ability to maintain the ongoing value of that collection segues into the next piece, which is the insurance protection.
Insurance protection: Are your collectibles fully and properly insured, with a process to adjust values as necessary?
There are insurance companies that focus on sports memorabilia, on exotic cars, on artwork. I have found that going through a more standard insurance company is a much more difficult process. They want documentation on every item, because it’s not their specialty. For someone like me, who has hundreds, if not thousands, of items, it’s just not feasible to do that. It’s a lot more feasible to go with an insurance company that focuses on your particular collectible niche.
Storage: Are your collectibles properly stored, with most foreseeable risks considered?
The goal is to make sure you’re maintaining the value by properly storing the items. Storage is much more important for some types of collections than others. But for any collectible, having it in better condition means significant money. As an example: Kids used to put baseball cards on their bikes, through the spokes. There is still a market for the 1952 rookie Mickey Mantle baseball card that was literally on a bicycle — if you have one of those, you could probably get several thousand dollars for it, even in horrible condition. But the same card in perfect condition sold two years ago for $12.6 million. And there are versions of this card that sell for everywhere in between.
Security: Have you taken safety precautions for both storing and transporting your collection?
Where are the collectibles stored, and how secure is that? How are they transported, and how secure is that? It’s different for different types of collections. For transporting sports memorabilia, I don’t need a security guard or an armored truck. There are different levels of security for assets like high-end cars. The idea here is to ask thought-provoking questions about whether the collectibles are secure.
Family awareness: Does your family know about both the content and the value of your collectible assets?
This one is near and dear to me. My family has no understanding of my collection, and they couldn’t care less about it. I have a signed Mickey Mantle card. It’s not worth anywhere near $12.6 million, but it’s worth a decent amount of money. And if my 22-year-old son was in my office after I passed away with his buddy, and his buddy saw the card and said, ‘That’s my dad’s favorite player!’ my son has the personality to just say, ‘Here, take it.’ And that is one of my most valuable pieces of memorabilia. But for the family, not being aware of what you have and what the value is, what to do with this after you’re gone can be a big issue.
Estate planning: Is your estate plan up to date, and does it account for your collectibles, family dynamics and tax implications?
Estate planning has two purposes. One is tax planning, and the other is: What is going to happen to the assets? If you’re in a taxable estate, then there are tax implications. If you have a significant collection, it is important that your estate plan reflect that collection — and that you know what the plans are for it. This item on the scorecard is closely connected to the next two, about gifts or the sale of a collection.
Transition via gifts while living and/or at death: Is there a plan in place, with a timeline and documentation, to give away the collectibles?
The idea is to confront the underlying question and really think about what you want. For example, some people make a conscious decision to get rid of some of their assets for a charitable purpose, which ties into estate planning.
Sale of collection while living and/or at death: Is there a plan in place, with a timeline and documentation, to sell the collectibles?
Right now, I don’t have any desire to sell the key pieces of my collection. But as I get older— especially because my family doesn’t have any interest in these— it might be gratifying for me to either sell some of these collectibles so that somebody else can enjoy them or perhaps donate them.