By Jon Carroll
I have always enjoyed art, even majoring in Art History in college. Over the years, my wife and I have acquired a variety of pieces from friends, family members and local art shows we have attended. If you are someone who appreciates and collects artwork, you should consider how your art will be handled as part of your estate plan, even if the value of the art lies in its personal meaning to you.
Artwork falls into the category of tangible personal property – the same as furnishings, clothing, collectibles, or other “stuff” you have around your house. Art, like these other items, can carry deep sentimental meaning. Maybe a piece of sculpture reminds your family of the vacation where it was purchased, or perhaps that work which always hung in the dining room evokes nostalgic childhood memories for your heirs. When more than one heir has strong feelings about a particular piece, disagreements can arise.
An approach to mitigate potential disputes is to include written guidance in your estate plan about how you’d like these items to be distributed. One method is to assign a total value to the entire collection and then balance distributions with other estate assets. While this approach may take equitable financial value into account, it may not account for emotional value. Another strategy is to provide guidance that allows heirs to systematically take turns selecting pieces, rotating choices until all items are claimed. Others use a personal property memorandum as part of their will or trust to designate specific items to specific family members. Including a short letter explaining why you’d like a certain heir to have the piece can also help avoid misunderstandings.
Of course, you don’t have to wait until you have passed to give away a cherished piece of artwork. The IRS currently permits you to gift up to $19,000.00 per individual annually without triggering gift tax reporting requirements. Maybe you want to witness a family member enjoy the gifted artwork, or perhaps you are downsizing and will no longer have sufficient space to display your artwork. These are reasons you may consider making a gift during your lifetime.
You may wish to donate artwork to a museum, university, or charitable organization. This can be a meaningful way to preserve your legacy, benefit the community, and potentially reduce your tax burden — but such gifts must be structured properly. Donations of artwork valued at over $5,000.00 require a qualified appraisal signed by a qualified appraiser, as well as submission of an IRS Form 8283 along with the donor’s tax return. A photograph that meets certain IRS requirements may be required for art objects valued at more than $20,000.00. For art valued at more than $50,000.00, a Statement of Value can be requested from the IRS, which helps to ensure compliance with tax regulations and deductions.
Before leaving such a gift as part of your estate, it is best to discuss potential donations with the intended recipient beforehand to ensure they can accept and display the piece. For estates that might be subject to the Federal estate tax (currently levied on estates with a value of greater than $13.99 million for individuals and $27.98 million for married couples), appraisals of artwork are also important to determine the value of the estate for taxation purposes.
Whether your goal is to share the collection you enjoy with family, support charitable causes, or ensure proper conservation, the key is planning now. By addressing your artwork as part of your estate plan, you ultimately provide clarity and peace of mind for those who will inherit your treasure.
Jon Carroll is a licensed attorney. The information in this column is provided for educational and informational purposes only, and does not constitute legal advice, nor establish an attorney-client relationship. Consult a qualified attorney in your jurisdiction for legal advice specific to your situation.
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