Why Do You Need to Create a Plan for Art & Collectibles?
Regularly, I meet with family office advisors and their clients to discuss the disposition of their collections. Most recently, I met with a client, wealth advisor and attorney to discuss a valuable collection of art, silver, manuscripts and furniture.
The patriarch requested that several paintings stay in the family and be dispersed between the four siblings. However, these multi-million dollar paintings currently lack the appropriate risk management.
IMPORTANT QUESTIONS TO ASK ABOUT TANGIBLE ASSETS
How much should they be insured for? Who should pack and ship these paintings to the multiple family members located in cities across the United States and in London?
The patriarch would also like to donate a significant manuscript to an historical society. Is the historical society interested in acquiring the object? Does the institution want to incur the cost of insuring and preserving a document of significant historical and financial value?
Finally, the client would like to sell a substantial collection of silver, period furniture, historical documents and several multi-million dollar paintings. Is this the appropriate time to sell all of these items? Should the client sell with one auction house? With multiple houses? In a private sale?
Clients face many issues related to managing a varied collection and the disposition of these valuable objects. However, high-net-worth individuals rarely apply the same rigor to these items as they do when making financial investments or business decisions. I educate clients and their advisors on the importance of developing and implementing a strategic tangible asset management plan that will allow for a detailed understanding of what assets are currently held, their value, future value, and costs associated with maintaining or disposing of them
VALUATION IS THE FOUNDATION
The valuation is the foundation for almost every decision made with tangible assets. Examining the current value of art, jewelry, wine, furniture and other collectibles, along with their future costs, allows clients to make better decisions regarding the appropriate disposition of these objects. Some clients may have items partially documented on their insurance policy but never review the values, which can change substantially over time. In recent recessionary times, many values can be much lower than previously listed, permitting cost savings by appropriately adjusting values. If inflation increases significantly in the future, current insurance values could prove woefully inadequate.
Too many families wait to develop a strategy for their valuables until it is too late to make a rational decision about an effective plan. The market may have shifted or legislative changes enacted which can impact the net monetary gain via a sale or donation of an asset. It is never too early to begin planning and discussing the various ideas with your key advisors. Correct documentation enables proper planning and ensures that the appropriate tax basis is reflected, which can save family members thousands of dollars.
OUR SERVICES
From detailed provenance research to uncover the history behind a collection, to the robust inventory management, security consultation and conservation planning to protect its future, our specialist teams treat every collection as if it were their own.
