Think leaving your art collection to heirs is your only option?

Posted on July 13, 2015 · Posted in Blog

Art gallery with 5 picturesHow do you pass on an art collection when your heirs are not able to take on the responsibility? If you’ve been fortunate enough to amass a collection of artwork, you may be facing the issue of how to ensure it is cared for during your lifetime and afterwards. In our last post, we talked about the concept of art stewardship – the obligation to preserve and protect art for future generations. Now the question is what tactics to use to achieve your goals when you can’t just simply leave it to your heirs. Maybe you don’t have heirs, or they’re not interested in the collection, or they lack the funds or ability to do what is necessary to be proper stewards. How do you deal with this? Below we outline 5 ideas. We’ll explore the pros and cons of each one of them in future posts.

1. Sell the artwork. This may be the easiest thing to do. The art is out of your hands and the proceeds can be used for yourself or your heirs. However, for personal and financial reasons this might not be what you want to do. You may be attached to your collection and sales are not necessarily that easy to accomplish.

2. Donate the artwork to a charitable institution. There are a lot of benefits to this approach, but you want to do your due diligence. There are many questions you should be asking to make sure you choose the right institution for your collection.

3. Set up a private family foundation. A private foundation is as an entity that while serving a good cause does not qualify as a public charity by government standards. It is usually funded by the creator of the foundation and does not seek contributions from outside sources. Foundations offer a host of benefits including tax deductions as well as giving you more control over your collection.

4. Establish a dedicated museum. Sometimes it isn’t possible to find a charitable organization that will take the art collection nor is a private foundation the ideal path. In that case, you may want to explore setting up your own private museum.

5. Find the liquidity for the heirs. If your heirs do want to keep the collection but there aren’t enough other assets to help them with the costs of maintaining the artwork, then finding liquidity can make all the difference. There are various tactics that can help you with this.

All of these options involve complex strategies that should always be undertaken with the guidance of professional advisors such as an attorney, accountant, art advisor, appraiser, and a financial planner who have expertise in the field.

Over the next few weeks, we’ll look more closely at the advantages and disadvantages of each tactic. Join our mailing list to get the latest information.