A fine art collection can be one of the most valuable assets a person owns — sometimes even more valuable than a home or oceanfront property. For the serious art collector, congruently serious estate planning is necessary to help ensure the paintings or sculptures are not lost due to estate taxation or fiduciary mismanagement. Fortunately, OC Wills and Trust Attorneys can help Orange County’s art collectors plan for the future by preserving those precious creations from the past.
First, an art collection is considered part of one’s estate, and is therefore added into the value of the estate when it comes time to conduct the probate process. One way to avoid over-inflating the value of one’s estate with artwork is to place the pieces in a trust, which essentially removes the valuable tangibles from the estate altogether. To do this, however, the trust must be “irrevocable” in nature, managed by a trustee other than the original grantor, and laden with language as to which beneficiaries will receive the pieces upon the grantor’s death.
An art trust is a great plan for any grantor with children actually interested in the artwork. However, what happens in the far-too-common scenario where adult children are more interested in cash than an original Renoir? When this happens, it may be time for a frank discussion with beneficiaries about their wishes and intentions, which can help determine the best estate planning tools to ensure the decedent’s wishes are honored as well.
In some families, children are encouraged to pick one piece to hold on to, and are permitted to sell the rest. In this situation, it helps to get an appraiser on board, as beneficiaries will be interested in knowing the value of their choice (and perhaps adjusting accordingly). Other times, a grantor may wish to donate the collection to charity, or direct that the collection is only sold intact as opposed to piecemeal.
No matter the ultimate outcome, anyone with a sizable artwork collection should seek the assistance of an attorney with experience in advanced estate planning.