Around 25% of art collectors in the world live in the United States, with Baby Boomers representing almost 50% of all art owners. Millennials and women are also catching up, with a rise in ownership of up to 8%. Aesthetic enjoyment is the primary motivation for amassing art followed by asset expectation and art appreciation as a family. Art collections are also vital and unique assets in estate planning. Whether you own one, a couple of pieces, or an entire collection, it is critical to design a thoughtful estate plan to ensure that your art survives or is passed on properly to your heirs and to future generations.
Prepare a Solid Documentation
Art comes in many forms, including paintings, drawings, sculptures, enamelwork, and even furniture. Paintings are the most popular form of art, followed by collage and drawings. They can also have different subjects and inspirations from animate to inanimate objects. For example, in the Art Nouveau movement, dragonflies were a popular inspiration. You can see them in emblems, metalworks, drawings, and glass works, windows, and interiors. One popular work is the dragonfly corsage ornament by Rene Lalique.
Hence, documenting artwork that you own during your lifetime is highly advisable and the more papers you have, the better it is in authenticating and appraising its value. If you own a piece of work that belongs to a specific era or movement, it will also help your advisors build a proper estate plan to manage your art properly.
Work with Professionals and a Legal Advisor
No matter what your plans are for your art pieces – passing your collection to your family, organizing a sale to distribute the proceeds, or donating them to a museum, it is smart to work with professionals who can help you achieve your goals in your estate plan. If your collection is huge, you might want to hire an art adviser who can arrange the appraisal, sale, and distribution of the proceeds.
A legal advisor is also an important person in estate planning. To illustrate, any piece that is worth over five grand must be appraised. In addition, if your federal tax return is selected for audit and your piece is valued at over $50,000, it may be referred to the Internal Revenue Service’s Art Appraisal Services, which may consult the Art Advisory Panel. The panel is a group of 25 renowned art experts who serve without compensation. It ensures that the taxpayer submitted the correct appraisals which should reflect the fair market value of the piece which in turn corresponds to the appropriate estate tax. Thus, as part of the planning process, your attorney can advise you to make provisions for taxes, delays, and other expenses if art is included in your estate.
Whether you’re collecting art for the sheer pleasure of it or plan to use it as an asset, it is vital to make provisions for your pieces when planning your estate. It will not only give you peace of mind knowing what will happen to your collection, but it will also make things easier for your heirs or the beneficiaries of your estate should you decide to donate them to a museum or make them part of an exhibition.