Passing On Art

Many art collectors face estate tax issues when the art work they purchased appreciates greatly over the years. For example, an individual who has an estate worth $100 million and an art collection worth $40 million will owe around $35 million in estate taxes. Additionally, problems arise when heirs feel obligated to keep the inherited art pieces, even when the cash from selling the piece wold be more beneficial. A few estate planning tips for art collectors are below:

• Determine whether the next generation really wants the art, or whether receiving a cash inheritance is more important to them. Designate who will receive which piece of art and explain how disparities in the value of each piece bequeathed will be settled.
• If the collection is one that should stay intact, consider donating or selling the collect to one entity or individual.
• To help avoid estate taxes, consider putting the art collection into trust. The younger generation will receive the art work and the appreciated value of the art while in trust, and the collection will be removed from the estate.
• Discuss the plan for the art collection with family to help eliminate any quarrels that could erupt later on.

See Kelly Greene, The Art of Passing Along Art, The Wall Street Journal, Mar. 2, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.