If you’re like most art collectors, you want your art to go to where it will be appreciated and enjoyed after your life is over. For some people, that means leaving your collection to a family member. For others, it’s leaving it to an institution like a museum. Still, others make plans to create their own museum to house their collection after they are gone. However, bequeathing art involves a little more planning and a few more steps than leaving most other assets to your heirs. Consider the following:
1. Art is taxed as a collectible. Capital gains on artwork are taxed at 28 percent, a higher rate than most other assets. Including art in your estate will increase the taxes your heirs will have to pay. This can be avoided by donating your artwork to a charitable remainder trust. Virtually all major museums have such a trust set up. You can donate the art during your lifetime or at your death. However, it’s best to communicate with the museum prior to your gift to make sure that your collection is a good fit for them.
2. There is a sizable gifting exemption. The IRS allows you to gift art with a lifetime maximum value of $11.18 million to one or more individuals. Spouses have an exemption; you can bequeath an unlimited value of art to your husband or wife.
3. Auction house commissions can be steep. If you decide to sell your art collection while you are alive, auction houses provide a good market for high-end art. However, you want to keep in mind that such businesses charge a commission based on the sale price of the items. The standard fee is 15 percent.
How to handle your art collection in your estate planning requires the assistance of a wealth management advisor who has experience with serious art collections. At The Americas Collection, we would be happy to recommend a firm. To contact us and to make an appointment to view our galleries, call at 305.446.5578. We are one of the premier corporate art dealers in South Florida.