As the market has abused those with substantial real estate holdings or stock portfolios over the past several years, many who hold their wealth in art find that their collection has become a substantial part of their estate.
Sometimes, children want pieces of a collection, but many times they do not or they want pieces that have significantly different values.
Putting children in charge of selling an art collection that they did not collect and do not know much about can create problems for the estate. The children parsing a valuable art collection could be forced to spend time and money understanding the value of a collection that the collector should have documented and settled long before passing it along.
A conversation with an estate’s beneficiaries needs to be open and honest. Children and grandchildren who are not in a similar financial place as their parents may fear that inheriting a $2 million art collection will affect the amount of cash they inherit.
An important first step is to determine whether the beneficiaries want the collection at all. If the pieces are large or require extra insurance, they may be more of a burden on children or grandchildren. If each of the beneficiaries wants a smaller, less valuable piece, then the rest can be donated or sold upon the owner’s death. All of this can be arranged beforehand so that the beneficiaries understand what will happen and will be less likely to squabble over the details. They also will not be saddled with the financial responsibility of determining the value of the pieces and finding a company to auction them off.
Children also may be naturally drawn to art with drastically different values. Managing the difference is something that should happen early in the estate planning process.
It is almost always a bad idea to allow children to try and “share” a piece of art. Whether it is a valuable musical instrument or a statue or a painting, sharing valuables usually ends with strained relationships.
Collections that should stay together can be tricky to handle if there are multiple beneficiaries to consider. If it makes sense to keep the collection intact, then selling it intact may be the best option unless there is a beneficiary who wants to keep it and the rest of the estate can be balanced to make up for it.
Putting the art in a trust can be considered just like people do with real estate as long as everyone stars on the right side of the IRS.
Art can be a beautiful thing to pass from generation to generation. It can be a more contentious piece of the estate because there are values combines with emotions. People will get every bit as emotional about artwork that they will about a piece of property or a vintage automobile.
O. Reginald (“Reggie”) Osenton is the Owner and President of Osenton Law Offices, P.A. If you need a Brandon estate planning lawyer, call 813.654.5777 or visit Brandonlawoffice.com.
