If you are an art collector owning an expensive work of art that’s likely insured or is displayed somewhere secure, you probably already know its value and how it qualifies as an asset that you’ll leave behind when you die. But what if you’re a casual art collector who purchases street art or buys artwork from relatively unknown artists struggling to make a name for themselves?
Whether you are a wealthy collector or refer to yourself as an art enthusiast buying art on a whim, not planning your art estate could mean your art collection may end up distributed to the wrong people in the event of your death. While you may have a will in place that assigns an inheritor of your properties, you may realize that they are not the ones you entrust with the future of your art collection.
There are many reasons you would want to carefully plan the disposal of your art collection, starting with leaving it to someone who will know how to carry out your explicit instructions on how to maintain, display, store, or even sell your art collection. Even if the art you own today has little market value, it doesn’t mean that its worth may not increase over the next few decades; therefore, leaving your art collection with someone who may live to see the day when the art collection has increased in value exponentially could be a worthwhile strategy to consider.
Estate Planning Tips for Your Art Collection
Some of the most expensive artwork to be auctioned off once belonged to private owners, who at the time they bought or inherited the work didn’t realize its value. There have even been many stories of people finding lost artworks by renowned artists at flea markets, presumably because the seller didn’t know they had such a valuable piece of art history in their possession. So, whether you have an extensive art collection or own a few pieces, you should already be making plans for your art estate to ensure it falls into the right hands after your death. As you begin the process of art estate planning, here are steps that you should not miss.
Keep track of everything
Keep accurate records, particularly if you have a comprehensive art collection that is housed in different locations. Maintain a database that chronicles everything about individual works of art, including sales receipts, documents proving authenticity, and descriptions of the work. To provide insight to the recipient of the work, you may even leave journal entries describing where you purchased the art, from whom you bought it, and what you paid at the time. These details may later help in authenticating the work.
Keep this inventory somewhere safe; remember, physical paper records can become water-damaged or degrade over time. Best practice would be to keep your inventory in a digital format stored in the cloud and have a backup in the form of an external drive.
Consult the art experts
Before deciding who will take ownership of your art collection when you’re gone, do your research or consult art experts on how to maintain the individual works long-term. While you may be financially able to maintain the artwork in your home or a storage facility, the recipient may not. And you wouldn’t want to leave the inheritor of your collection with a financial burden.
Decide who will inherit your collection with a lawyer
Your art estate plan should be legally binding; therefore, a document that you should create with your lawyer. It should detail where each piece of work in your collection should go after your passing. Some people may leave an entire art collection to a loved one, while others may distribute individual works to various recipients. Leaving specific instructions about who inherits your art collection helps remove or reduce the possibility of family members fighting over your collection or other people claiming rights to it.
Art estate planning is also best from a tax perspective and helps take care of tax liabilities that may burden the inheritors of your art collection. The person or organization inheriting your art collection may be overjoyed you named them as recipient, but that feeling can quickly go sour when they realize they’re facing tax complications. Therefore, you should consult with a tax professional beyond working with your lawyer.
Have a candid conversation with potential inheritors
While you may think that a family member or friend would be happy to inherit your art collection, there’s a possibility that they will be hesitant about taking on the responsibility. This hesitation may stem from the lack of confidence to take on a high-maintenance piece of work, such as painting that needs to be under certain lighting and temperature conditions to ensure preservation. Or it could be a massive sculpture that the recipient will not have space for in their home or their property.
During the discussion with family, friends, and other potential inheritors, you won’t only gauge their level of interest in owning or executing your final instructions for your art collection, but you’ll also recognize any potential conflicts or disputes. It’s not uncommon for families to fight over assets, particularly those that have both intrinsic and extrinsic value.
Have your collection appraised by a professional
Regular appraisals will give you an idea of whether your collection is growing in value. If you have particularly expensive artwork, it’s best practice to have them appraised every three years. Art appraisers cost money and typically charge by the hour. A good way to save money on art appraisals would be to schedule the appraiser to work on multiple works in one day.
The knowledge of the art’s value may not necessarily change who you choose to inherit your collection; however, it may impact how you decide the work should be maintained. For example, an artwork that has risen in value considerably may be left with specific instructions for its preservation and storage. If this is the case, you’ll have to talk to the future recipient of the artwork who may not be interested in maintaining such a high-value piece of work.
Also, depending on who you leave the art collection to, knowing its value may determine if your intentions for the works are to auction them off or have them donated to a museum or charitable organization.
Consider the artist’s heirs’ interest in acquiring the artwork
If you happen to own a valuable piece of work from a reputable artist, you may consider giving the artist’s heirs the opportunity to acquire or maintain the work. More than anything, this act is out of respect for the artist’s surviving family, who may have desired to uphold the artist’s legacy but, for whatever reason, lost ownership of the artwork.
Archive your art collection on a trustworthy platform
Maintain archives of your art collection on a platform you can trust, providing you with the benefit of easily accessing digital versions of your collection remotely. This is important, particularly if your art collection is divided among multiple locations or you need quick access to the details of the artwork.
At ARTDEX, we know how crucial it is for art collectors to archive their art collections, particularly for the purpose of estate planning. As an art enthusiast and collector, you probably use various tools to manage your art—a digital art organization program, social media, maybe even spreadsheets. With ARTDEX, you can create and organize all your art records on one platform.
Click here to learn how you can change the way you collect art and prepare for your art collection’s future.