While most art collectors are in it for the love of art itself, for others, it’s a business investment. Just like real estate properties or company stocks, you’ll want to have a plan for estate planning where your artwork will go once you’re no longer here.
Interestingly, many art collectors don’t consider what will happen to their art after they die but with a lot at stake, you really should be thinking about it.
Regardless of whether your art collection came from the heart and is truly a passionate endeavor, it’s still likely worth a lot in monetary value. It’s usually the ones who love art the most who are less likely to see it as an investment and therefore, they won’t be thinking about who it goes to when the time comes.
Here, we’re taking you to step by step through how to plan your estate with an art collection.
Keep Accurate Records
For starters, it’s important to first know what pieces you own. It may seem like a pipe dream to some, but it is possible that some collectors can hardly keep track of everything they own. Perhaps they have multiple homes where they keep various works of art or they have some at the office or on loan to museums so they aren’t top of mind.
So, first things first, take a comprehensive inventory of your art collection and make sure the records are accurate.
Some experts go even further. Keeping a database of the name of the piece and the artist with an image of the piece, its location, and sales receipts should be common practice. It also comes in handy to have records of previous owners ‘provenance’, correspondence from the artist, and other pertinent documents that can affect the value of your art.
Anything that can help prove your art work’s authenticity will benefit your future heirs after you pass and will help your beloved art live on for future generations.
Do Your Research Before Hiring an Appraiser
If you’ve looked into getting your art collection appraised, you’ll know that professional appraisers cost a pretty penny. Still, you do need to understand the value of your collection and, in many cases, an appraiser is the only way to do so in a reputable way.
But there are some things to consider before having an appraiser set the value of your pieces.
Various websites including ArtNet.com and MutualArt.com track auction prices and can help you get an idea of what your art might be worth without an appraiser. If the piece isn’t worth all that much, it’s possible it won’t even be worth an expensive appraisal. After all, who wants to spend more money on the appraisal than the artwork itself?
Art appraisers can cost up to $1000 for a single piece, so doing your own research beforehand can come in handy to save money. You might also organize it so that your most valuable art is moved to one place so that an appraiser can work on multiple pieces on the same day. They charge by the hour so you’ll want to do some planning to make the most of their time.
Experts also suggest hiring an art appraiser versus a general appraiser and to avoid appraisers who seem interested in buying the work or ones who don’t agree on a price beforehand. Galleries and museums can recommend art appraisers or you can find one through professional societies such as the American Society of Appraisers.
Sit Down With Your Potential Heirs
Once you know what you’ve got and how much it’s worth, it’s time to have a talk with your heirs. Sure, it can be awkward, but talking about what’s potentially going where can save a lot of trouble later on.
Some questions to ask might be:
- Who’s passionate about the art in this collection?
- Who has the means to maintain a collection of this caliber?
- Who wants what pieces?
Most often, heirs to art collections end up selling much of it since commonly the younger generation has vastly different tastes in the art to their elders.
Experts say not to make any promises right then and there and think of it more as a way to gather facts. Then, you can make an informed decision in the future.
Consult With a Tax Professional
Finally, we have perhaps the most boring part of dealing with your art collection which is minimizing taxes.
For example, if you sell your art, you will be taxed on it differently depending on how long you’ve owned it. This matters if the art has appreciated or depreciated in value since you’ve had ownership.
You might also consider donating your art to a charity or a museum in which you might be able to avoid capital gains on your taxes while receiving a deduction for the charitable gift. There are also tax exclusions available for relinquishing your art that’s worth up to $15,000 to a child or grandchild without having to file a tax return as a “gift.”
Overall, it’ll be to your benefit (and to your heirs’ benefit) to consult with an estate-planning lawyer or an accountant about the tax implications of what you might do with your art collection once you’re gone.
We know it’s not the most glamorous part of owning a brilliant art collection, but these are important considerations to make. If you care about the art you own (which you surely do), you’ll want to take the appropriate steps to protect it while also protecting your family and heirs from dealing with unnecessary costs and headaches.