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 random 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. Given the subjective nature of art, it is difficult for any collector to say how much a any particular piece is worth.
The IRS, on the other hand, will not be shy about assigning "fair market" values for gift and estate tax 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 (see, for example, 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 is that all you have to give away? Are you actually giving objects that the beneficiaries will appreciate 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 beloved art treasures.
For more estate planning ideas and information, check out www.est8planning.com.