Are you a big art collector but are not sure how this factors into your estate planning? You could be leaving behind major problems for you beneficiaries that go far beyond simply passing on these art related assets. First of all, if you don’t have the appraisal work completed, your beneficiaries or your executor could be dealing with challenges such as estate fraud.
While the federal estate tax and gift tax exemption is $11.18 million per person, and estate taxes might not be an issue for most people, if you’ve accumulated a substantial volume of artwork over the course of time, ignoring the value of this art could lead to problems later if you don’t report it appropriately. If you don’t report the value of your art collection, penalties, estate taxes, fines and tax fraud issues could affect your loved ones.
Since the statute of limitations for tax fraud is essentially limitless, you want to do your homework well in advance. Even if the estate tax exemption amount won’t be triggered by your personal art collection, you want to have clarity and organization regarding how you intend to dispose of these assets and its overall value. This can help to keep the peace among beneficiaries and decrease the chances that your loved ones will become involved in an estate planning or probate related dispute. The first step to take is making an inventory. Make a list of every piece of art and its overall value. If you’re not familiar with the values, you can hire an art appraiser to determine the fair market value of the collection. In addition to leaving artwork to beneficiaries with the appropriate value percentages, you’ll also be informed about whether or not any estate tax issues arise.
A trust may be a better way to pass on your art collection. If you transfer your art collection into a trust, this protects the privacy of your estate and the artists involved, as well as the beneficiaries. Schedule a consultation today with a knowledgeable estate planning lawyer who can help you figure out what you need to do in order to best protect your interests.