Estate Planning: Including an Art Collection in Your Estate
You may not think of your art collection in terms of money. Generally, anyone who collects art does it for the love of the work or respect for the artist. However, when it comes to including your art collection during estate planning, it is considered a valuable asset and should be included in your will. As such, there are a few things you should keep in mind when planning for the future of your collection and your estate. Today, Davidson Law Group will discuss some of the important details that go into estate planning and an art collection.
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Documentation is Key
Before you choose where your art will go, you must begin by collecting any and all appropriate provenance documentation such as bills of sale or appraisals. Estate planning attorneys recommend that you properly catalog, photograph, insure, and get an appraisal for your entire art collection.
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Decide Where You Want Your Art to Go
Depending on the preferences of your family, you have a few different options for your collection. First, discuss with your family exactly what your goals are after you pass. While this is very likely an uncomfortable conversation, it is important to gauge their interest in maintaining your collection. Phrase your inquiry in a way that allows your family members to respond honestly and openly.
After you have established how your family feels about your art collection, it is time to include the art in your estate planning. Some of the options include:
- Selling Your Collection – While selling art is more expensive than many other assets, this may be a better option than leaving it to your family if they are not interested or financially able to maintain it. The capital gains tax on selling art is 28% for long-term gains, compared to 20% for most other assets. While this will lower the overall value of your estate, this can be a way to provide your family a measure of financial freedom after your passing.
- Leave Your Artwork to Your Heirs – You have the option to leave an entire collection or just individual pieces to your chosen heirs. One factor to keep in mind when selecting a non-charitable beneficiary is whether or not they have the resources to properly maintain the artwork. You can also transfer your collection to an LLC. This allows you to leave your collection to multiple people. The family members will be responsible for the collection as a conglomerate, and if they decide to sell any of the pieces, they will share the profits evenly. Generally, you have to select a specific manager from your heirs who control the artwork. Discuss this option with your estate planning attorney to ensure your manager has the resources and information to properly aid them in this role.
- Donation – A third option is to donate your collection to a museum or gallery. You receive a tax deduction of up to 30% of your adjusted gross income based on the value of the work at the time of the gift. This can be an option if your heirs are less interested in the artwork and you want to preserve the collection as a whole. You can often specify the details of your art when donating. For example, you can request that the pieces remain together, or have your name included in the area the pieces are held. If your collection has a specific theme or niche, this can be a great way to ensure the public has the ability to appreciate your art collection in the future.
Discuss Your Collection with an Attorney During Your Estate Planning
Perhaps the most important step you can take during the estate planning process is to discuss your wishes with an attorney who specializes in estate planning. The attorneys at Davidson Law Group have spent years helping individuals pass their belongings on to their loved ones. If you are interested in beginning your estate planning, contact us today in Fort Worth, Allen, or Tyler to learn more.