How to include valuable art in your estate plan

How to Include Valuable Art in Your Estate Plan

Angelina Jolie is a collector of antique knives. Johnny Depp owns dozens of limited-edition Barbies, and Tom Hanks has a collection of vintage typewriters. You may collect more common items, but regardless of specifics, valuable collections are considered part of your net worth, and should be addressed during legacy planning.

Under Federal tax law, IRC Section 408(m), the IRS defines collectibles as works of art, valuable alcoholic beverages, antiques, metals, gems, stamps or coins (with some exceptions), and any other tangible personal property that is considered collectible under the law. Similar to financial assets and real estate holdings, there are tax consequences for whomever inherits your collectibles upon your death.

With an eye to the future, you will need to decide how to include valuable art in your estate plan. Options include donating to a charitable cause, designating an heir or arranging for the sale of the items and clarifying how the funds should be distributed.

Personalize your plan

The first step in working with your estate planning attorney, begins with designating heirs and then formulating a clear plan on how you wish to distribute your financial assets. The same process applies to your more complex assets, because if not properly addressed in the estate planning documents, the existence of a valuable art collection or other assets could disrupt the orderly disbursement of your estate.

Articulating a plan is particularly important because there may be differing opinions among family members regarding the fair market value of select art pieces. And these differences can lead to disagreements, delays, or even litigation.

One of the best ways to avoid problems from arising is to have your collection appraised by an expert while you are still living. An accurate valuation of these assets is critical to your heirs because they will owe taxes on the total value of your estate, including art and other collectibles.

Other valuable collectables

Art collections are just one example of tangible personal assets that will need to be addressed in your estate plan. As demonstrated by the unique items favored by certain celebrities, there are many other valuable collectables that will require the same consideration.

Individuals with significant worth require special consideration when establishing an estate plan. JMV Law has proven results in the area of HNW estate planning and will provide you with intelligent solutions to safeguard your legacy in order to develop a customized strategy to manage and mitigate potential risks and protect your assets.

Posted in Estate Planning, Updates.