There are only two experiences all humans share—birth and death. We have no control over our own birth, but with some careful consideration, we can have some control over the aftermath of our death.
Carefully crafting an estate plan for your worldly possessions not only shares your desires and wishes with those you leave behind but also eases some of the burdens for them.
A complete estate plan services your entire estate—all your possessions and assets. Your art collection is just one piece of the puzzle. You’ve spent a lifetime building up an art collection you cherish, it’s time to properly protect and preserve those assets.
Here is a basic estate planning checklist to get you thinking about the future of your art collection:
First Things First, Create An Estate Plan
It’s never too early to start thinking about will planning.
Don D. Ford, a board-certified estate planning and probate lawyer at Ford + Bergner LLP in Houston, says that “creating an estate plan for your art isn’t necessarily driven by value or quantity. It’s when the art becomes important to you, that’s when you create an estate plan for your art collection.”
The time when the art "becomes important to you" can be a variety of things and is ultimately a personal choice. It can be at a particular value point of the collection, a certain amount of time you spent acquiring it, or a time when you have a strong sentimental attachment to the works.
Once you deem your collection important enough to plan for, it's time to start the process.
Get Your Inventory In Order
Before you can bequeath anything, from a single painting to a large collection, you have to know what you have.
Your art inventory should include important identifiable information about each piece in your collection. This can consist of pictures, serial number or identifying number, bill of sale, invoice, appraisal reports, and any other documentation you have.
Your inventory records are an important tool for those responsible for your estate after your death. It provides them with all the information about your individual pieces and your collection as a whole.
Using an art inventory management system like Artwork Archive to manage your art and important documents not only keeps your information secure in one place, it also makes it easy for others to access during and after the estate planning process.
Avoid Works “Walking Away”
Ford says that, unfortunately, “art is one of those things that seems easy to walk away with if the family isn’t getting along.”
Your art inventory will let your estate executor know when something has gone missing and provide them with the documentation to assist in its recovery.
Know Your Art’s Value
Your attorney most likely won’t be an art aficionado. Ford says, “ the difficult thing to understand about art is the value, whether that be fair market, insurance, and what we will place on it as a taxable estate.”
To understand the value of the pieces in your collection, keep accurate and up-to-date appraisals of each piece. This value will be the basis of any taxes that go along with your collection after your death.
Consider Your Tax Burden
It’s important to consider the tax burden your art collection will bring along to its inheritor whether that be a gift, estate and/or income taxes on the works you leave behind.
Estate taxes are different in every state, so check with your legal team for an accurate estimate for your collection.
If you have a piece that will highly appreciate over time, you can consider giving the art away during your life before it doubles in value so that any appreciation is not included in the estate.
You can also consider a life estate, making a gift now but maintaining the right to use it for the remainder of your lifetime.
Determine Who Gets Your Artwork
There are a few ways to plan for your art collection after your death. You can leave an individual piece or the entire collection to one person or group. You can donate the works to a charity, museum or institution.
Ensure That Your Wishes Are Actually Executed
Whether your estate plan lists keeping the works in the family or bequeathing them to an institution, even the most comprehensive estate plan is just a list of your wishes. You have to rely on the executor of your estate and your family to abide by the plan.
Ford jokes that in your estate plan you can set a contingency if your plan isn’t followed, “You can claim you’ll haunt them, but it may not be enforceable.”