“Art is left to loved ones or other individuals, donated to charity directly, or in trust at the death of the collector. Proper planning means that the artwork is transferred to others very tax efficiently.”
Affluent art collectors hope that their acquisitions will appreciate in value, but they will also purchase pieces for personal and aesthetic reasons. These collectors may be extremely focused on acquiring art—and not very interested in disposing of it.
This frequently means that at death they’ve amassed sizeable collections. However, it’s also surprisingly common that many affluent art collectors do a poor job of addressing their artwork in their estate plans, says Forbes in the recent article, “Estate Planning And Affluent Art Collectors.”
Failing to plan for the disposition of collections upon death can mean a lot of expense for your family. This is because they may have to pay higher estate taxes. It can also result in the unfair division of the art, creating family conflict and legal battles.
Unfortunately, wealthy collectors often adopt the default option of not properly planning. If the collector isn’t certain to whom to leave pieces, he or she will procrastinate until it’s too late.
However, smart planning can often resolve these issues. One option is to have corporate entities to own the art. This addresses many ownership issues and can simplify probate, because there’d be no need to retitle the art.
With a meaningful and valuable collection, proper planning means more than constructing an estate plan. It means building files of ownership to make certain there are no questions concerning provenance. The files should include certificates of authenticity, bills of sale and insurance records.
Work with an experienced estate planning attorney to ensure that your wealth is passed on to whom you select and done in a way that mitigates taxes.
Reference: Forbes (January 8, 2018) “Estate Planning And Affluent Art Collectors”