A recent article from ARTnews on “The Great Wealth Transfer” takes a forward look at the implications of the impending transfer of wealth (including art) from the Boomer generation to Gen X and Millennials. In the article, the consensus from Sara McDaniel with Morgan Stanley seems to be that children may not want to take on their parents’ art collections due to differences in taste. Sara recommends the best option for art collectors is to sell a collection before passing, or gift it to an institution.
An accurate appraisal and audit of collections will make assessing these options much simpler. Art Peritus has assisted countless private clients by providing certified appraisals, organizing art collections into management systems, and with preparing estate planning appraisals for inheritance tax and wealth transfer purposes.
One recent example of an Art Peritus Project included appraising an Estate from a High Net Worth collector with over 15,000 objects purchased from all over the world. The art and collectibles ranged in age from antiquity to the 20th Century. The works were valued any where from $5 to $5 million USD.
The project came with many challenges and nuances that we were ready to tackle due to years of experience in handling similar situations including:
- Many items were packed away in boxes, with very little room to maneuver.
- There were no pre-exiting inventory or appraisals.
- Our busy client had very few receipts.
- We were only given access to the collection over 10 days.
- Only 1,500 art objects were visible during the first 5 days of the appraisal project. The rest were seen 2 months before project completion
- The collection included some pieces in very complicated collecting categories with very few ‘qualified’ specialists recognized by the IRS/USPAP
- The project came to us during the Covid Pandemic, so we were conscious of health requirements.
Despite the challenges presented in the appraisal of this private art collection, we were able to complete the project to the satisfaction of the client. The steps to completion involved the following:
- Art Peritus employed 22 certified appraisers from our network of vetted specialists.
- The Estate’s Trust required a “step-up in basis” appraisal for tax purposes. This occurs when the price of an inherited asset on the date of the decedent’s death is above its original purchase price. The tax code allows for the raising of the cost basis to the higher price, minimizing the capital gains taxes owed if the asset is sold later.
- We established a threshold of value so that the Trust wasn’t paying for unnecessary work from us on objects valued below $500. We always consider our client’s budget.
- We narrowed down the list of objects to approximately 5,000 items for the report.
- We provided full comparables for any work with a FMV (fair market value) over $5,000
- The Trust now has access to the collection in our database to decide how they want to handle deaccession in the future.
Art Peritus has the resources and experience to take on appraisal and art collection management projects of any size with our roster of specialists, project oriented staff and specialized database. What may seem like a daunting task comes together seamlessly with the right resources and art project management experience.