My grandmother enjoyed painting, but her will did not address her art. Like most artists, she left a lot of it. Family appreciation of her work was mixed. Cleaning her home involved one cousin filling a dumpster with paintings while another cousin fished them out, one by one.
For successful artists of modest means, the best estate plan may give a few pieces to family and sell the rest. To ensure deductibility of the sale expenses, the will or trust instrument should direct the sale of any remaining art and distribution of the proceeds .
Leaving valuable art “in equal shares” or letting the executor decide invites trouble. Leave specific items to specific beneficiaries or let beneficiaries pick. Oldest child can get first choice, then second oldest, then so on. Either way, equalize distributions made from other assets.
Families with less than $5 million need not worry about estate taxes. Most artists can relax. However, consider an artist married to a physician, or the artist who is a physician. Wealthier artists might make a planned gift to charity or an artist-funded foundation.
For gifts of art to the surviving spouse, preservation of the estate tax marital deduction is a concern. There’s no problem with an unrestricted, specific bequest to the surviving spouse, whether particular items or the entire collection. Those qualify for the marital deduction, and the sky’s the limit, at least if the surviving spouse is a U.S. citizen. However, what about giving the surviving spouse a right of first refusal over the same thing? Imagine the spouse can pick one or more favorites. Rights of first refusal may create a taxable gift. To preserve the marital deduction, instead give all art to the surviving spouse but enable a qualified disclaimer, anticipating an alternate beneficiary for the rejected art.
Every artist should prepare an inventory with description, name, date, story, condition, repairs, location, and exhibitions. For extra credit, take pictures, assign ID numbers, include measurements, note mediums, and guess values. Make a marketing plan. Tell your executor the best auction house or gallery to sell your work.
Collectors and executors will have additional considerations, from valuation to risk management, provenance, and liquidity. Consult Ramsay H. Slugg’s Handbook of Practical Planning for Artists, Art Collectors, and Their Advisors (2d ed., ABA 2019). Artists, visit GYST-Ink for estate-planning and other tips.
This article was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.