Art collections can prove to be a difficult piece of your estate plan, especially if you’ve acquired a collection that has appreciated significantly. For some people with significant collections, their art can make up a large portion of the value of their estates, with the art continuing to increase in value even as other assets stagnate. If you have an art collection of significant value, there are several issues you need to be aware of as you develop your estate plan.
Issue 1: Estate taxes and heir interest. When it comes to art collections, the passion the parent has for the artwork may not be shared by the children who stand to inherit it. In some situations, a parent may want to leave a child a high value work though the child may not want it, or be afraid that the value of the work will require them to sell it to cover the estate taxes.
Issue 2: Collection sizes. For collectors with large collections, the logistical problems involved in passing them along can be prohibitive. If you have a collection that requires a large amount of space, storage facilities, and significant insurance to protect it, the practical concerns of leaving it to a family member may make it impractical to do so.
Issue 3: Preventing conflicts. On the flip-side of inheritor ambivalence is when you have children who are all interested in keeping the collection or even just a single piece. In order to prevent conflicts from arising and damaging family relationships, you’ll need to carefully plan ahead to ensure that each child or family member feels they have received a meaningful gift.
- How Estate Planning for a Family May Trap the Unwary Practitioner - August 31, 2022
- State Income Taxation of Social Security Benefits - August 24, 2022
- Understanding Tax Apportionment Clauses - August 17, 2022
