What will happen to your cherished art?
Whether you have one piece or a carefully constructed collection, make sure it’s a point of pride, not contention, for your heirs.
Across 40 years of their lives, the Mexican collectors Natasha and Jacques Gelman painstakingly assembled paintings they loved from Europe’s masters as well as from rising stars in their own country such as Frida Kahlo and Diego Rivera.
When Natasha, who outlived her husband, died in 1998, the European private art collection was left to the Metropolitan Museum of Art in New York. However, a will made in Mexico and quirks in that country’s legal system have left the fate of the 20th century Mexican masterpieces subject to brutal battles between warring factions. None of this costly angst is what Natasha intended.
For most, collecting art is inspired by admiration for an artist or style of art. Art legacy planning is a secondary concern. Yet art needs to be considered as carefully as any other financial asset when it comes to estate planning, says Sarah Z. Collins, a Wealth Advisor who advises J.P. Morgan clients based in Mexico on strategies to hold and transfer wealth across generations.
A clear record of your personal art collection
“Especially if you have collectors who support artists who are friends, there is an emotional aspect beyond money,” Collins says. “Yet most clients understand, at a certain level, that if they don’t do meticulous art legacy planning all that they love may ultimately be broken up” in effect, destroyed.
As a first step, Collins advises clients to get their administrative house in order. All sorts of facts about the art that can seem mundane—for example, its location—can have implications for tax and estate planning. Ideally, the collector will have each item appraised and keep an inventory of location, type of ownership (personal or a holding company, for example), and loan status on each piece. From a wealth transfer perspective, accurate recordkeeping cannot be emphasized enough.
Make Your Intent Clear
Once the logistics have been squared away, it’s time to set a strategic framework for how the art will live on. Whether you have a sizeable private art collection that you might expect a museum to take or just a few beloved pieces to pass on to cherished individuals, the important point is to come up with objectives.
You have three basic options: sell, donate to an institution, or gift to a loved one. Often, art owners choose some combination of these three. You might decide, for example, that certain pieces of your collection should be kept together and displayed to the public; other pieces should be sold to support the housing and upkeep of the public collection; while still others should go to your children.
After deciding what you’d like to happen, the next crucial step, says Collins, is to discuss these plans with your heirs. These waters are far more fraught than donors imagine. Sometimes a child will express a deep love of a particular object and want it as a remembrance, regardless of value. By contrast, another heir may find their parents’ love of Cubism mystifying and not want the responsibility or cost of caring for that rare Braque.
Planning for art is often complicated by the fact that, in the end, private art collections are not money—so they cannot be divided up perfectly equally, warns Collins. Even parents who attempt to give similar gifts to each child may be foiled when one artwork unexpectedly increases in value.
Still, being crystal clear about your intentions—early and often—can help ease tensions down the line. “Talk to your children,” says Collins. “Explain that, while this is your art collection, you want to bring them into the process. And even if in the end it is not down-to-the-dollar equal, it is fair. And they’ve gotten a chance to express what they wanted.”
Consult professionals about your art legacy
Once your vision is set and your heirs are on board, it is time to take the steps that will ensure your vision becomes a reality. Families frequently work directly with museum directors and their own attorneys to make plans as airtight as possible. Collins says J.P. Morgan advisors like herself can offer additional counsel on how to pass on the art in the most tax-efficient manner - everything from when to sell assets to when to transfer them. They also can help collectors identify the organizations best suited to collections and make introductions when needed.
In March 2017, the noted philanthropist, David Rockefeller, passed at the age of 101 and his family announced that, according to his wishes, his world-renowned collection would be sold at auction and the proceeds given to charities of his choice. The collection set records when it netted over $832 million. Obviously, there were many museums and six children who might have benefited from such a fortune and could have tried to contest the will. Yet there was not a drop of rancor in the public eye.
Instead, his son, David Rockefeller Jr., described the auction as “an experience that beautifully and thoroughly conveyed Peggy and David Rockefeller’s great passion for art, design, craftsmanship and beauty.” He added, “Just as my siblings and our own children are full of pride and gratitude at the end of this historic week, we know our parents would feel the same.”
Proof that when art legacy planning is done right, everyone wins.