Establishing an art collection takes time, effort and financial resources, and can present challenges when considering its future. Art is intensely personal, and in estate planning “is a much more emotional process than when you’re dealing with stocks and bonds,” says Ramsay Slugg, a wealth strategist for U.S. Trust who advises clients on estate planning when art and other collectibles are involved. “These kinds of assets are not about numbers,” he says. “They are about heartstrings and about passion.”
Those visceral connections make it important to consider the future of your collection. Also, practicalities underscore the value of advance planning. First, unlike financial assets, art can’t always be sold quickly. Second, if planning is ignored, your collection may be sold off at your death, which can be expensive and may shortchange your heirs or deprive you the opportunity to determine the fate of your cherished holdings.
These kinds of assets are not about numbers, they are about heartstrings and about passion.
There are steps to a less passive approach. Start by gauging your heirs’ interest. “Quite often, the next generation just flat-out doesn’t know or doesn’t care about your art, because it’s not their passion,” Slugg says. However, if family is interested, the next step is to determine their focus — your $10 million painting or its $10 million value. Also, your children may be divided, with one camp keen to keep a favorite piece and another eager to sell. Discussing these options may be uncomfortable, but having an awkward conversation now is usually preferable.
Key approaches to dealing with your collection, Slugg says, are to sell it, give it to a noncharitable beneficiary such as your heirs, donate it to a charitable beneficiary such as a museum, or establish a private museum to house it. Each brings its own advantages and disadvantages, which must be considered.
Finally, the best solution may involve a combination of options, and you’re likely to have more satisfaction if you work with your U.S. Trust advisors to outline a precise strategy.
Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.
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