So, how should families fortunate enough to have valuable collections decide what to do with their art or other objects? Here are some options.
As the saying goes, “One man’s trash is another man’s treasure.” So it is with art.
For some people, the most valuable art pieces are the classics that have survived a few centuries. Other people prefer styles that may involve a lot of dribbled paint and found objects. Of course there are people who really appreciate velvet Elvis paintings and those featuring card playing canines. In the end, to each his own.
The IRS, on the other hand, will assign a market value for taxation purposes. So, how do collectors and their estate planning attorneys make proper plans for the transfer of such treasures (or trash)?
Recently, estate planning issues regarding art have received media attention (to include the strange case of Ileana Sonnabend) as highlighted in a recent article in the Wall Street Journal appropriately titled The Art of Passing Along Art.
As the article notes, the major problem with making an estate plan to transfer art is the nature of “art” itself. For example, will your heirs appreciate your taste in art and how will the IRS value your art? In a worst case scenario, the heirs do not like the art, but the IRS does (for valuation purposes) and levies estate taxes on the value assessed.
Ultimately, you need to ask yourself why you are giving the art collection in the first place. Are you giving to an art-lover or in lieu of liquid assets? Are you actually giving to the beneficiaries or are you simply trying to find safe homes for the pieces?
Whatever your wishes, there are estate planning solutions. However, you need to prioritize your own goals and wishes for your loved ones, as well as for your art treasures.
Reference: The Wall Street Journal (March 2, 2012) “The Art of Passing Along Art”