You love your art collection, which is why you want to pass it on to your favorite people as a part of their inheritances. However, bequeathing art the right way takes advanced preparation to ensure that your loved ones benefit from your art pieces without suffering from tax burdens, arguments over who gets what and other probate-related nightmares after you're gone.
From an estate tax planning perspective, estate planners need to make sure that their art connections and total estates do not exceed the $11.18 million federal tax exemptions. If they do exceed this amount, then an art collection may require special strategies to ensure that all tax burdens are covered and accountable. Some estate planners, for example, will want to avoid the need to liquidate works of art to pay for tax liabilities and some advanced tax planning strategies may be required to achieve this.
Art collectors also need to organize their art with precision and clarity. They also need to have the art recently appraised to ensure that heirs and beneficiaries are treated equally. All this work will help avoid the threat of disputes and legal wranglings among beneficiaries. When creating an asset distribution plan for your art, remember that some family members may want the same art and some pieces could have tremendous sentimental value for heirs.
In some cases, it can be very beneficial to use a trust to transfer ownership of art to your heirs. Makes sure you fully understand all your estate planning options as they pertain to artwork and how to avoid potential probate disputes. This will help you select the most appropriate strategy to suit your needs and the needs of your family.