Tag: art and estate
This week, we thought it would be interesting to touch on the intersection of law and art in estate planning.
Artwork collections, whether they are comprised of a multitude of works or just one piece, are often a treasured possession of their owners, carrying deep emotional significance and/or high monetary value.
In estate planning, the sentimental and financial aspects of an art collection can become intertwined. Testators and beneficiaries may have competing views. As a simple example, there could be disagreement on whether the art should be sold or kept within the family. That being said, the valuation of artwork is an issue that may often fly under the radar.
The value of an artwork collection can have serious repercussions on the administration of an estate, especially where the estate lacks liquidity to address expenses, such as estate administration taxes.
However, the valuation of art may not always be a clear cut issue, as discussed by Mr. Ronald D. Spencer, Esq. in this article. Value can vary drastically over time, and even where the value remains stable, there may be significant challenges in finding buyers, especially where the collection is large or mostly one artist, potentially burdening the estate with tax liabilities and no certain financial benefit in exchange.
Understanding and articulating one’s wishes concerning their art collection is the first step in minimizing the impact of some of these issues. You will want to set out your intentions and wishes clearly in your will.
Avoiding uncertainty can be achieved through several means. The collection can be distributed through testamentary or inter vivos gifts where appropriate beneficiaries exist. It can be sold, which may carry advantages where the valuation and marketability of the collection is uncertain over time and a potential buyer has been found. Donation to a charitable organization is also an option, with many registered charities dedicated to art.
Whatever path one chooses, it is important to understand the implications from a tax and transactional perspective to ensure the most efficient execution of the testator’s intentions.
Thank you for reading and have a great day!
Suzana Popovic-Montag & Raphael Leitz
With so much taking place around us now, I forced myself to choose a topic for today’s blog that, although still estates related (this being, after all, an estates blog), allows me to think about something beautiful. I landed on art.
Full disclosure: I have blogged about art and estates before. See here and here for some shameless self-promotion. Without wanting to revisit these topics, I did some searching and was intrigued by this Financial Times article about the Art Loss Register (ALR).
The ALR is the world’s largest private database for lost and stolen art, antiques, and collectibles. Their services are essentially twofold. First, the ALR assists to deter the theft of art by promoting the registration of all items of valuable possession on its database and also the expansion of checking searches. Second, by operating a due diligence service to sellers of art, the ALR operates a recovery service to return works of art to their rightful owners. In addition, the ALR has expanded to negotiate compensation to the victims of art theft and the legitimising of current ownership.
In addition to art dealers, insurers, and museums, the ALR also assists private individuals including beneficiaries and trustees. A trustee who is intending to liquidate art may wish to rely on the ALR to prove title and authenticity, thereby potentially increasing value and mitigating risk of fraud.
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