MUSEUM TRUSTEE ASSOCIATION
  • Home
  • About us
    • Mission
    • Board of Directors
    • Current Members >
      • Institutional Members
      • Individual Members
    • Contact
  • Membership
    • Benefits
    • Types >
      • Institutions
      • Patrons
      • Friends
    • Member Spotlights >
      • San Angelo Museum of Fine Arts
      • Museum of Fine Arts, Boston
      • Greensboro History Museum
      • Mingei International Museum
      • Virginia Museum of Fine Arts
      • Heard Museum
      • Maryland Center for History & Culture
      • Hillwood Estate, Museum & Gardens
      • Lehigh University Art Galleries
  • News
  • Events
    • Chicago Fall Forum 2023
  • Resources
    • MTA On-Demand
    • Templates for Trustees
    • Tips for Trustees
    • Blackbaud Webinar Series
    • Member Resource Library
    • IDEA Resources & Information
  • Donate
  • Patron Weekend

Top 10 Planning Tips for Your Art Collection

10/1/2016

4 Comments

 

By Ramsay H. Slugg

When speaking on the topic of planning for the ultimate disposition of art collections, I offer the following top ten planning tips:
1. Do not leave the ultimate disposition of your collection to chance.  It is surprising how many collectors do not engage in this process and leave the ultimate disposition decisions to their family and advisors, most or all of whom do not have the intimate knowledge of their collection.

2. Use a competent and experienced advisory team. The team should include art experts; such as dealers, gallery owners, curators and restoration experts; risk management professionals; qualified appraisers; private bankers; and attorneys and accountants, all with experience in planning with art. Not only do they need to be on your advisory team, but they need to communicate with one another.

3. Do appropriate risk management. Engage an insurance expert who is specifically experienced with art. You may or may not purchase insurance, but do consider the security of your collection, from theft, fire, water, storm, or other casualties.

4. Prepare and maintain an inventory. This is true for all assets in the form of financial statements, but it is particularly true with respect to art and other collectibles. An inventory is critical to every stage of the planning process, and should be kept as current as possible.

5. Know the value of your collection. Insurance providers and lenders, if any, will require appraisals and periodic updates. Appraisals will be required for income, estate and gift tax purposes.  Even if not required, you should have your collection periodically valued, perhaps every three to five years, depending on how actively you are collecting and on what you are collecting.

6. Maintain records. As part of your inventory, maintain records of ownership and, as the value and significance of the collection grows, further evidence of provenance. This includes all contracts to purchase or sell, actual bills of sale, loan agreements with museums, and so on. Consider title insurance if you have doubts about the provenance of any piece you are considering for purchase.

7. Ask the big question. Involve your family. Do they share your passion for your art? If so, planning should focus on how to transition the art to them, whether that is now or later. If not, and there are other financial assets or you feel they are otherwise provided for, then explore your charitable options.

8. Consider liquidity. Art is by its very nature an illiquid asset.  It does not provide cash flow or income during life, and although it may be sold, that comes with a high tax cost, and perhaps not quickly enough to address estate liquidity needs.  Art lending may be an appropriate solution to address this lack of liquidity.

9. Consider charity. Given the expense of selling, and the opportunity cost of wealth transfer, the “charitable solution” is often the most tax efficient way to keep your collection intact.  And if the “charitable solution” is right for you, consider lifetime donations as this will entitle you to a federal income tax charitable deduction in addition to estate tax savings.  Most important, do not surprise the museum (or other charity), if you are leaving art to them. Not all museums will want your art. It may not fit their collection, or their storage vault. Talk to them now about your wishes, even if they are not carried out until later.

10. No surprises. Give your family, and your personal representative, clear direction on what your estate will include, and clear direction on what you want to happen. And while you are going through the planning process, make sure your advisors know the extent and value of your collection.
Trying as the planning process may seem, try to enjoy the process of planning for the disposition of your collection. It is certainly not as much fun as building the collection, but it is ultimately just as important.

Picture

Ramsay H. Slugg is a Managing Director and member of the National Wealth Planning Strategies Group at U.S. Trust.  Previously, he was the National Practice Director of Bank of America’s Philanthropic Management group.  He has also served as the Central Region Director of the Bank’s Charitable Management Services Group, and the Central Region Director of the Wealth Management Consulting Group.
Mr. Slugg has also served as an adjunct professor at Texas Christian University and Texas A&M College of Law.  He is a frequent speaker on tax and financial planning topics, especially as they relate to art and collectibles, and is frequently quoted in the Wall Street Journal, New York Times, Forbes, Barron’s and other business publications.  He is the author of the Handbook of Practical Planning for Art Collectors and Their Advisors, published by the American Bar Association’s Section of Real Property, Trust and Estate Law.

Mr. Slugg is admitted to practice law in Texas, is a member of the State Bar of Texas, the American, and Tarrant County Bar Associations, the Tax and Estate Planning Section of the Tarrant County Bar (Chair, 1999-2000), the Lone Star Chapter of the Partnership for Philanthropic Planning, and the College of the State Bar of Texas.  He currently serves as Co-chair of the American Bar Association’s Real Property Trust and Estate Law Art and Collectibles Committee, as well as several other leadership positions.  Mr. Slugg received his J.D. degree from the Ohio State University College of Law, and his undergraduate degree from Wittenberg University.

4 Comments
Troy Blackburn link
12/20/2016 04:32:44 pm

I wasn't aware that appraisal of art is required for income, estate, and gift tax purposes. I've heard, too, that knowing the value of a piece of work could be useful for leverage purposes in an auction. My grandmother has lots of great pieces and we'll have to keep these tips in mind as we go about trying to find out how much her art is worth and what we can do with it.

Reply
Tiffany Locke link
5/5/2017 09:30:48 pm

An advisory team of art dealers, gallery owners, and restoration specialists would be a good choice. If you have people who know what they're doing, it could help protect your collection. I would imagine that having a collection of books on the pieces that you have, could help you be able to give people the information on the artwork whenever you need it.

Reply
Adam Golightly link
5/14/2021 06:17:37 pm

My cousin has been thinking about building an art collection because she just got 5 really old paintings from her grandfather that look really nice. She would really like to make sure that they can be maintained safely with the help of a professional, so that it looks nicer for longer. I liked what you said about how she should maintain an inventory that can make it more current because it is critical to the planning process.

Reply
Tex Hooper link
1/12/2022 08:30:01 pm

I didn't know you had to declare art as an asset. I want all of my art pieces included in my will. I'll have to get a lawyer to write it up.

Reply



Leave a Reply.

    Categories

    All
    Advocacy
    Art Collection
    Blue Star Museums
    Board Leadership
    Board Orientation
    Cultural Property Policy
    Deaccessioning
    DEAI
    Donor Acquisition
    From The President Of MTA
    Fundraising
    Governance
    Guest Author
    Interview
    Leadership Transitions
    Special Initiatives

    Archives

    December 2022
    August 2022
    June 2022
    August 2021
    June 2021
    June 2020
    November 2019
    July 2019
    April 2019
    March 2019
    January 2019
    December 2018
    September 2018
    July 2018
    June 2018
    April 2018
    March 2018
    February 2018
    January 2018
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    March 2017
    February 2017
    January 2017
    November 2016
    October 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    July 2015
    June 2015
    February 2015

    RSS Feed

SIGN UP FOR MTA E-NEWS

Members of the MTA automatically receive the association's monthly emailed newsletter, MTA E-News, and may also take advantage of access to past issues in our archives here.
Donate

BECOME A MEMBER

Institutional Membership
Patron Membership
Friend Membership

​CONTACT MTA

Museum Trustee Association
211 East Lombard Street, Suite 179
Baltimore, MD 21202-6102
410-402-0954
​
​
Contact Us
© Copyright 2018 Museum Trustee Association. All Rights Reserved.
  • Home
  • About us
    • Mission
    • Board of Directors
    • Current Members >
      • Institutional Members
      • Individual Members
    • Contact
  • Membership
    • Benefits
    • Types >
      • Institutions
      • Patrons
      • Friends
    • Member Spotlights >
      • San Angelo Museum of Fine Arts
      • Museum of Fine Arts, Boston
      • Greensboro History Museum
      • Mingei International Museum
      • Virginia Museum of Fine Arts
      • Heard Museum
      • Maryland Center for History & Culture
      • Hillwood Estate, Museum & Gardens
      • Lehigh University Art Galleries
  • News
  • Events
    • Chicago Fall Forum 2023
  • Resources
    • MTA On-Demand
    • Templates for Trustees
    • Tips for Trustees
    • Blackbaud Webinar Series
    • Member Resource Library
    • IDEA Resources & Information
  • Donate
  • Patron Weekend