How to Include Your Art Collection in Estate Planning
Many people enjoy collecting works of art as a way to showcase their preferences, invest for the future, or preserve pieces that have intrinsic, cultural, or historical value. Around the world, 53% of art collections have more than 500 individual pieces. If you have an extensive or valuable art collection, including it in your estate planning process and working with an estate planning lawyer to distribute it to museums, auction houses, or heirs ensures that the pieces will be appreciated, properly cared for, and respected in the way that the artist intended.
Document the Collection
Even if you only have a few pieces of art, you need to document your collection. This is a good idea for insurance purposes as well as estate planning. To document your works of art, take photos of certificates of authenticity. Keep those certificates outside of your home, such as in a safe deposit box. Take photos and videos of all sides of the artwork, including the bottom or back and the area where the artist signed or stamped the piece. Locate the bills of sale, and keep those with your other documentation.
Decide What to Do With the Art After Your Passing
You’ll need a plan for each piece of art in your collection. There are three main ways to handle artwork after death. You might choose to donate the piece to a nonprofit, such as a museum. You could send one or more pieces to an auction house to be sold. You could also bequeath individual pieces to specific members of your family or to your friends.
If you choose to donate a work of art to a nonprofit, you’ll need to document this in your estate plan. The nonprofit’s accounting team will need to provide you with paperwork to accept the piece. Your estate plan should include how the artwork will be given to the nonprofit. This includes details such as how it will be packed, shipped, and verified by the receiving institution. If you want the nonprofit to do something specific with the artwork, such as display it with a plaque that indicates you donated it, include this information in your plan. You’ll also need an independent appraisal of the piece’s value for tax purposes.
If your family members wouldn’t appreciate your collection of art or would rather have the money generated by the sale of your art, include directions about auctioning it in your estate plan. You should have arrangements with an auction house in advance. This might require pre-planning, such as an appraisal and a plan for shipment. Keep in mind that the auction house will keep a significant portion of the proceeds, and you won’t have a choice in who bids on and wins the art.
Giving Your Art Collection to Heirs
If you choose to give pieces of your art collection to heirs, inform each individual separately. Your estate plan should include a list of who gets which piece. The plan should also include how those pieces will be delivered to each recipient. The trustee of your estate will be responsible for distributing the artwork to your heirs. Consider that your heirs might later decide to sell the pieces or donate them to the charities of their choice. Deciding how to allocate your art collection among heirs or charities is both a personal and financial decision. Consulting with your tax or financial advisor and an estate planning lawyer will help you minimize tax impacts and reduce the risk of conflict after your death. For more information about estate planning and your collection of art, contact our Hackensack, New Jersey, estate planning attorney at 201-996-1200 to set up an appointment. You may also fill out the online contact form on our website, and an associate from The Knee Law Firm will contact you to schedule a consultation.