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Creating a Suitable Legacy for Your Art Collection
Published Date : July 30, 2021
July 30, 2021
There are so many factors to consider when collecting art, not the least of which is what to do with it at the end of your life. Because it could grow to be a significant part of your taxable estate, careful planning is necessary during your lifetime to ensure that these valuable pieces ultimately end up in the hands of those that will appreciate them.
As you begin to build your collection, remember to keep all the relevant documents associated with each purchase. Keep a detailed inventory and update it as you buy and sell, including purchase receipts, current appraisals and even photographs of the pieces in your collection. Being organized is a welcome gift to those left to settle the estate. For significant collections, you may wish to consider an art inventory management system to assist in streamlining the process.
If you are considering gifting pieces of value to family members, make sure that you have an open and frank conversation in advance with them to ensure that the art will be well-received. They may not be in a financial position to accept what you think is a generous and thoughtful gift. They should be made aware of the value of the art as well as the associated costs that go along with maintaining the piece. Insurance and even storage (should the gift recipient not have an appropriate place in their home to showcase the art) can both be costly expenses. And just because you have a strong emotional attachment to your collection, others may not share this same sentiment and your well-intended magnanimity may be viewed as more of a burden.
In that case, it may make sense to either donate the collection to a charity, or a museum where the art could be enjoyed by many. Do your research in advance and determine which museum would most welcome these beautiful pieces then work directly with their staff to collaborate on your mission statement. Understand where the art will be exhibited. Is the institution willing to accept your entire collection? Will your name be displayed along with the art? Is the collection significant enough to warrant your name on the gallery in which the art will be shown? Be specific and clear about your expectations should they be fortunate enough to receive what you have worked so hard to create over the years.
Of course, you always have the option to sell the pieces. If that is the best solution for your personal situation, factor in associated tax implications along with any other costs. You do have options so whether you ultimately decide to dispose of the artwork through a gallery, auction house or via a private transaction, make sure you have a grasp on the commission ranges, tax implications and who is responsible for potential shipping costs. Doing your due diligence is critical as you must know that those you are dealing with are trustworthy.
Whatever you decide, remember that your wishes must be appropriately reflected in your trust and estate documents. Once you have determined the course of action that best captures your intentions, be sure to visit with your estate planning attorney to update your plan.
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