Value of Advice: Wealth Transfer Strategies for Art & other Passion Assets
THURSDAY, FEBRUARY 11, 2021 – 2PM EST / 11AM PST
Wealth transference and tax strategy is a hot topic of conversation in 2021 particularly when discussing passion assets such as art, jewelry, wine, cars and other valuable collections.
Please join us for a webinar discussing these issues and others related to wealth preservation and tax efficient strategies.
QUESTIONS TO CONSIDER
- Should passion assets be transferred in an LLC or a trust?
- If the collector has philanthropic objectives, should a charitable trust be created or should the object(s) be donated directly to an institution?
- When is a rental leaseback situation preferred? What are the rules governing fractional gifts of art?
- Can passion assets be discounted? If so, when does this occur? When and how do you transfer passion assets out of your name?
PANELISTS
EVENT DATE
- Thursday, February 11, 2021 – 2pm EST / 11am PST
EVENT LENGTH
- 1 hour
FORMAT
- Live interactive webinar
“Gathering people together at art fairs created so many discussions and opportunities. We need that oxygen.”
Following the news that Art Basel is to be postponed once again, Managing Director Guy Jennings discusses the recent absence of art fairs and the snowball effect this has on gallerists and auction houses.
To read more of Guy’s comments on this piece by The New York Times, please click here.
The art trade on both sides of the Atlantic has been abuzz with sales from permanent collections at public institutions, otherwise known as deaccessioning. Most prominent in the recent debate about associated ethics is the Baltimore Museum of Art (BMA). The institution offered major works – by Brice Marden (3, 1987 – 88), Clyfford Still (1957-G, 1957) and Andy Warhol (The Last Supper, 1986) – for sale at Sotheby’s in October 2020 with a combined estimate of 65 million USD. Just hours before the Marden and Still paintings were due to hit the block (the Warhol was to be offered privately), the museum withdrew both from the auction in response to a growing maelstrom of negative criticism, internal and external.
The BMA was technically operating within the bounds of newly loosened regulation from the Association of Art Museum Directors (AAMD) in America: a targeted, finite response to the ongoing pandemic which has, to all extents and purposes, obliterated gate receipts from museum balance sheets. Funds from the sale would be directed towards ongoing running costs (even though the museum was not in financial distress), ‘care of the collection’ and, crucially, new acquisitions to diversify the collection of a major museum rooted in a city with a 65% black population. The museum director had even secured public consensus from the executive director of the AAMD before proceeding with the proposed deaccessions.
Operating within the rules, with admirable objectives, the plan was still deemed controversial enough to attract bitter criticism from all sectors of the art world and, further, controversial enough to spook the institution into withdrawing the works from public sale. Why?
Long seen as one of the unassailable taboos in the UK museum sector, and generally handled with judicious caution in America, two key factors have contributed to a temporary loosening of the strict ethical codes surrounding the practice. The first is the decimation of visitor numbers to museums due to the global pandemic. The second is a growing sense of urgency, especially in American cities with black majority populations, to develop public collections which reflect the diversity of society at large.
Permanent collections housed by museums, often accumulated over decades or even centuries through a patchwork of philanthropic gifts, bequests or acquisitions, are generally intended to be just that. Caroline Douglas, Director of the Contemporary Art Society (CAS), an organisation that acquires work on behalf of their partner museums in the UK, explains: ‘Museums are the forever proposition – that’s why artists want to be in them.’ Gifts to museums, whether from an individual or an organisation such as the CAS, are usually given with the explicit proviso that such works must remain part of the collection in perpetuity.
In both America and the UK, professional membership organisations publish guidelines of best practice for their member institutions. While rules vary, there are a few broad points of consensus. Until the global pandemic, one of the most common restrictions was that works could not be sold to keep the lights on. Deaccessions – sales from the permanent collections – might be allowed where works fell outside an institution’s ‘core collection’ and with the rigorously enforced purpose of funding new acquisitions. In other words, funds raised must be reinvested back into the collection.
There is subsequently a dual aspect to the question of deaccessions: why is the work being sold? And what will the funds be spent on? Having a defensible answer for one part of this equation isn’t enough. Institutions must make a clear case for the acceptability of a sale, and there are subsequent restrictions – both written and unwritten – pertaining to the use of sale proceeds.
The risk of eroding donor confidence in the entire museum sector underpins much of the regulation at play. Not only are museums usually charities or non-profits with beneficial tax codes, they are also typically built on the generosity of private citizens and the state. Selling works from the collection – given on the explicit or implied understanding that they would remain the collection forever – is therefore seen as a grave betrayal of the trust placed in them by donors. It subsequently threatens to dismantle faith in the very mechanisms and structures which maintain museums as viable economic entities in the first place.
There is another great risk with museum deaccessions. Tastes change, fashions come and go. The world evolves. While some artists may appear utterly irrelevant to the present moment, they may come to be seen as pivotal by later generations. And what might appear frivolous and inconsequential in one historical era might be understood as prescient and vital by museum audiences of the next. There also remains – most pertinently in the case of the BMA, but generally for museums in Western Europe and America – the question of representation and the art historical canon.
It’s clear to today’s audiences that the ‘approved’ art historical account of the post-colonial age needs expansion, revision and rewriting. But it’s also impossible for anyone to know what the cultural consciousness of the future might deem important. The mission of the museum is, therefore, inherently conservative: to hold, intact, collections intended for the public good. The prevailing taste which forms a public collection is likewise, in and of itself, a historical artefact.
Similarly, selling the work of living artists can have a profoundly negative impact on their market and career trajectory. While museum acquisitions are the gold standard of validation for an artist, sale of their work from a museum, logically, can have the opposite effect. Essentially suggesting that an artist is, in the eyes of the museum (the custodians and narrators of art history) no longer of consequence. To make such a dramatic, public and negative statement about an artist’s work goes entirely contrary to what is widely understood as the Hippocratic Oath of museums vis-à-vis the wellbeing of the artistic community it serves.
2020 has shown everyone – inside and outside the art world – that systems, structures and rules that previously seemed immutable are in fact entirely contingent. Many public institutions have survived this year with furlough schemes, goodwill and inventive short term strategies. But they can’t live on vapours alone. The Victoria & Albert Museum, for example, received 15% of its usual traffic in August. Such precipitous drops in visitor numbers are untenable. Museums need donations yes, but most importantly they need an audience, gate receipts, successful gift shops and humming cafes. Another long stretch into 2021 without this revenue will bring financial distress, just as public borrowing hits record highs in the UK and the glamourous social events which generously lubricate the cogs of private philanthropy remain strictly off limits. We can therefore only foresee more – not less – works coming to market from the museum sector next year. Outcry or no outcry, reality must bite sooner or later. The debate continues.
Image 1: Image credit Sotheby’s; Image 2: Image credit Baltimore Museum of Art; Image 3: Image credit Amir Hamja/Bloomberg via Getty Images; Image 4: Image credit Katherine Hardy/The Art Newspaper; Image 5: Image credit Baltimore Museum of Art
Further Reading
- Collection Management
- When the Kids Don’t Want it: Converting Your Passion Assets into Charitable Impact
Managing the Legacy of the High-Profile Client
THURSDAY, JANUARY 7, 10AM PST / 1PM EST
Whether a client is a major sports figure, a celebrity, a politician or a founder of a notable company, it is inevitable that over their lifetime he or she will accumulate objects and documents of significance.
This webinar will focus on developing a strategy for managing their legacies and archives.
TOPICS DISCUSSED
- How do you value and manage archival material associated with
a high profile client? - Are there tax opportunities and strategies what would benefit a high profile client’s legacy?
- How do you develop a long term collections management strategy for the memorabilia and archival materials associated with the high profile client?
PANELISTS
OUR HIGH-PROFILE CLIENT DIVISION
We understand the unique challenges facing our clients and can offer high-profile individuals a full suite of services, and related white-glove concierge support, on a global scale.
We’re experienced working with actors and celebrities, directors and producers, musicians, athletes, models, authors, journalists, and industry executives. Offering the high-quality, collection-specific solutions to help make informed decisions around the strategic, long-term management of fine art, jewelry, and other high-value collectibles.
Further Reading
- High-Profile Client Collections & Sudden Wealth Syndrome
- Helping the High-Profile Client Buy & Sell Smart
- Helping the High-Profile Client Buy Luxury Assets
THE LURE OF THE LUXURY ASSET: HELPING THE HIGH-PROFILE CLIENT BUY LUXURY ASSETS WITH INTELLIGENCE
THURSDAY, DECEMBER 17, 2021 – 10AM PST / 1PM EST
Whether it is buying sports or rock memorabilia, collecting fine wines, investing in collector cars, or acquiring artworks for the home, there are rules for acquiring tangible assets intelligently.
The Fine Art Group is pleased to bring together an expert panel in Part 2 of our latest webinar series. It will provide insight into these markets and collecting categories.
*Calendar invites will be sent to registrants emails.
TOPICS DISCUSSED
- What specific attributes make the piece valuable?
- What is the best venue for acquisition?
- What is the best process for acquisition?
- When is it time to sell, where do you go and what do you do?
MODERATOR
Panelists
OUR HIGH-PROFILE CLIENT DIVISION
We understand the unique challenges facing our clients and can offer high-profile individuals a full suite of services, and related white-glove concierge support, on a global scale.
We’re experienced working with actors and celebrities, directors and producers, musicians, athletes, models, authors, journalists, and industry executives. Offering the high-quality, collection-specific solutions to help make informed decisions around the strategic, long-term management of fine art, jewelry, and other high-value collectibles.
Further Reading
- High-Profile Client Collections & Sudden Wealth Syndrome
- Helping the High-Profile Client Buy & Sell Smart
- Helping the High-Profile Client Buy Luxury Assets
JULIAN OPIE SITE-SPECIFIC COMMISSIONS
The Fine Art Group is delighted to announce the completion of two major new, site-specific commissions by Julian Opie for Swire Properties in Hong Kong.
Parade. (2020) depicts sixty-two colourful and dynamic characters from all walks of life as they go about their daily business. The multi-layered and dimensional metal figures are finished in glossy varnish, accompanying passers-by in their journey through the pedestrian link between the Mall, Three Pacific Place and Starstreet Precinct.
Located along the walkway between the Island Shangri-La, Hong Kong and Conrad Hong Kong, Running 3. (2020) occupies a dramatic position along a prominent raised walkway. Conceived as a continuous frieze of thirteen life-sized figures in black vinyl, Running 3. embodies the dynamic of central Hong Kong.
Opie’s distinctive formal language is instantly recognisable and reflects his artistic preoccupation with the idea of representation and the means by which images are perceived and understood. Always exploring different techniques both contemporary and ancient, Opie plays with ways of seeing through reinterpreting the vocabulary of everyday life; his reductive style evokes both a visual and spatial experience of the world around us. Drawing influence from classical portraiture, Egyptian hieroglyphs and Japanese woodblock prints, as well as public signage, information boards and traffic signs, the artist connects the clean visual language of modern life with the fundamentals of art history.
The artist has commented on observing busy city crowds:
“A constant flow in both directions. Each person a mass of decisions and style and attributes with a destination and only a fleeting moment in front of me but combined, they create a constant flowing crowd. Each random person would be great to draw, better than I could ever invent.
I draw using a graphic program that allows me to bend thick lines over the photograph and fill the gaps with flat colour. A gang of characters emerges, caught in mid stride, going about their business with bags or phones or cold drinks. Their random, momentary decisions became frozen into a set piece, a logo and symbol drawn in the most emphatic and generalised way I could manage while sticking to the details of what I saw. Symbols and hieroglyphs, images and road signs perform similar tasks of turning objects and people into a language that is specific enough to describe but general enough to be read. These words can be combined to form sentences just as the people combine to form crowds. Walkways and pavements turn pedestrians into lines of text, read left to right.”
The series of figures, created for Pacific Place by British artist Julian Opie, is the latest addition to Swire Properties’ permanent art collection, as part of the Company’s long-time support of the arts and place-making. Inspired by and designed to engage with its community – the workers, shoppers of Pacific Place and people of Hong Kong Parade. and Running 3. is a noteworthy highlight for the Pacific Place community and beyond.
Find out more about the project here.
Visit www.julianopie.com to find out more about the artist and his works.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
Image 1: Image courtesy Julian Opie; Image 2: Image courtesy Pacific Place; Image 3: Image courtesy Julian Opie; Image 4: Image courtesy Pacific Place; Image 5: Image courtesy Julian Opie
SUCCESSFUL SALE OF JEWELRY ADVISORY CLIENT COLLECTION
We are pleased to have assisted a client in successfully selling their impressive jewelry collection in the Sotheby’s Magnificent Jewels Sale.
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 29
Fancy Vivid Orange Diamond and Diamond Ring
Estimate: $1,000,000-$1,500,000
Sold: $1,895,500
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 30
Fancy Red Diamond and Diamond Pendant-Necklace
Estimate: $2,500,000-$3,500,000
Sold: $3,166,000
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 191
Padparadscha Sapphire and Diamond Ring
Estimate: $180,000-$220,000
Sold: $226,800
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 192
Suna Sapphire and Diamond Necklace and Pair of Earrings
Estimate: $100,000-$150,000
Sold: $126,000
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 184
Emerald and Diamond Ring
Estimate: $75,000-$100,000
Sold: $163,800
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 185
Oscar Heyman & Brothers
Emerald and Diamond Ring
Estimate: $50,000-$70,000
Sold: $151,200
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 183
Oscar Heyman & Brothers
Emerald, Black Opal and Diamond
Estimate: $50,000-$70,000
Sold: $88,200
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 178
Oscar Heyman & Brothers
Black Opal, Diamond, Ruby and Sapphire ‘Clover’ Necklace
Estimate: $50,000-$70,000
Sold: $100,800
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 176
Oscar Heyman & Brothers
Black Opal, Diamond, Ruby and Sapphire
Estimate: $10,000-$15,000
Sold: $17,640
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 177
Oscar Heyman & Brothers
Black Opal, Diamond, Ruby and Sapphire Bracelet
Estimate: $30,000-$50,000
Sold: $52,920
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 16
Van Cleef & Arpels
Diamond and Pearl Lapel-Watch
Estimate: $25,000-$35,000
Sold: $37,800
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 187
Oscar Heyman & Brothers
Diamond, Colored Diamond and Ruby Brooch
Estimate: $35,000-$45,000
Sold: $88,200
Sotheby’s
December 9, 2020 – Magnificent Jewels
Lot 186
Oscar Heyman & Brothers
Pair of Sapphire and Diamond Pendant-Earclips
Estimate: $40,000-$60,000
Sold: $69,300
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
With the year drawing to an end, the auction houses recently rallied for one last push with five major evening sales held between New York and Hong Kong across Phillips, Sotheby’s and Christie’s over the first two weeks in December. Representing what would have been the usual November slot, these sales were pushed back to December. However, despite Sotheby’s opting to move their ‘November sale’ forward to October, they curiously bookended this period with yet another evening auction, this time mixing Impressionist & Modern and Post-War & Contemporary lots, a tactic in line with Christie’s recent approach.
The Hong Kong sales showed remarkable strength and considerable depth of bidding when compared to the New York segments. Christie’s Hong Kong first held a fifty-eight lot Modern & Contemporary sale and a standalone one lot Sanyu sale. With all but one lot selling, the sale surpassed its presale estimate by 20% bringing in $132 million. This was followed a few hours later by the 20th Century department holding a ‘global sale’ starting in Hong Kong then moving on to New York, in a relay style similar to what we saw in July, totalling $119.3 million solidly within their presale estimations.
This appeared a risky gambit with major works by several artists such as Zao Wou-Ki, George Condo, Yoshitomo Nara included in both the Modern & Contemporary and One Sale Hong Kong segment. However, this overlapping of content did not seem to slow the appetite one bit, the One Sale Hong Kong was 100% sold. As Christie’s moved to their New York segment, bidding from Hong Kong continued long into the evening, including a Renoir painting towards the end of the sale which meant Asian bidders were active at 11.45 pm local time. More surprising, a sculpture by Hans Arp sold to a Hong Kong bidder in the room for $2.4 million including premium, as Georgina Hilton bid virtually for the collector with Adrian Meyer in New York.
Phillips Hong Kong opted to hold their sale in partnership with Poly Auctions, one of mainland China’s biggest auction houses. The strategy paid off with only two unsold lots, the sale surpassed its presale estimate by around $10 million. Poly crucially expanded the bidding to mainland China which helped increase competition with Phillip’s Hong Kong bidders and ultimately pushed the price on several lots. Buyers leapt bidding increments by as much as HK$5 and HK$6 million at times. Most notably, a major 1995 painting by Yoshitomo Nara, initially chased by seven bidders, was fought over by Nick Hilton with Phillips Hong Kong and Blair with Poly Beijing, resulting in the work doubling the low estimate and selling for $13.3 million. It eventually sold to the same phone buyer that won the Matthew Wong and set the second highest price for the artist. Interestingly the partnership with Poly also led to more online bidding than we had seen in a while, clients from Singapore, Taiwan, Samoa and Korea, all underbid online for several of the top lots.
It was a very different feel during Christie’s New York One Sale segment which had five unsold lots compared to zero from the Hong Kong section and more than half of their lots sold on or below the low estimate. Their Post-War & Contemporary day sale also failed to reach the low end of its presale estimate. Intriguingly, the star evening sale lot was not a Contemporary work but a Toulouse-Lautrec, which had belonged to automotive head Henry Ford II. This attracted at least five bidders, all in New York, before selling well above estimate for $9 million including premium. 43% of the sale was guaranteed by value as the success of the sales continues to be assisted by financial backing.
Throughout the sales a number of artist records were achieved. At Phillips both in Hong Kong & New York new records were set for Matthew Wong, Bernard Frize, Lucas Arruda, Emily Mae Smith, Vaughn Spann, Jadé Fadojutimi, Kehinde Wiley, Mickalene Thomas and Amy Sherald. Several artist records were achieved with Christie’s as well, including Salman Toor (surpassing the record Phillips set earlier that day) Georges Mathieu, Nicholas Party, Joyce Pensato, Dana Schutz, Amoako Boafo and Shara Hughes, amongst others (interestingly both the Boafo and Hughes were acquired by the same collector). And Sotheby’s reached a new record for Barkley L. Hendricks. The notable theme running through this list of records being major success for black artists and less well established artists, as ever increasing speculative buying rages on.
Phillips New York sale had significant weight in this area which contributed to the success of their evening sale, in disparity with the Christie’s New York and Sotheby’s sales being predominantly focussed on the traditional canon. Phillips achieved an extraordinary price for Amy Sherald, only the second work to come to auction the painting sold for $4.3 million with premium against an estimate of $150,000 – 200,000. Contrastingly, the top priced lots by evening sale regulars such as Jean-Michel Basquiat, Donald Judd and Clyfford Still saw more muted bidding. But their top lot by David Hockney did see the artist’s highest price for a landscape, selling to Cheyenne Westphal’s client for $41.1 million including premium.
Sotheby’s only had two lots by ‘emerging’ artists and this affected the level of activity in their sale. Before the sale even began, they withdrew five lots with a combined low estimate of $10.1 million which perhaps attests to whether the new mixed category strategy paid off. For the remaining lots in the sale bidding was subdued bar for the expected Hendricks, Wong and remarkable Calder, their top selling lot of the evening. Some last-minute guarantees were put in place at half of the low estimate for works by Van Dongen and Achipenko. This benefitted their sell through rate but affected the bottom line.
Overall, Hong Kong showed considerably more vigour than New York, clearly the Asian economy has weathered recent events better than the US. However, Phillips New York’s results were encouraging, indeed it was the house’s highest ever evening sale total in that category. Evidently the market is currently buoyed by young artists and a sale tailored to this current demand is what’s required to see active bidding. Restrictions over seeing works in person continue to fuel this, the due diligence requirements for a 1950s Ab-Ex painting remain very different to a recent primary market piece, as well as the obvious economic factors. Volume continues to be another feature, the bulk of ‘marquee’ evening sales over the last few months is affecting demand. With the promise of yet another ‘major’ sale around each corner what is to stop collectors holding out and waiting to see what the market offers down the line. Hopefully, the break between now and the next round of London sales will bring much needed respite.
It will be interesting to see how the auction houses approach the next six months given the recent dramatically changed schedule. However, generally the overall strength in the performance over the past nine months has been impressive given the circumstances.
Image 1: Image courtesy Christie’s; Image 2: Image courtesy Christie’s; Image 3: Image courtesy Phillips; Image 4: Image courtesy Christie’s; Image 5: Image courtesy Christie’s; Image 6: Image courtesy Phillips; Image 7: Image courtesy Sotheby’s; Image 8: Image courtesy Sotheby’s
Further Reading
- The Asking Price: Understanding Value 1
- The Asking Price: Understanding Value 2
- Looking Forward: Ten Art Market Predictions for 2023
Helping the High-Profile Client Buy Luxury Assets with Intelligence
THURSDAY, DECEMBER 17, 2021 – 10AM PST / 1PM EST
Whether it is buying sports or rock memorabilia, collecting fine pieces, investing in collector cars, or acquiring artworks for the home, there are rules for acquiring tangible assets intelligently.
The Fine Art Group is pleased to bring together an expert panel in Part 2 of our latest webinar series. It will provide insight into these markets and collecting categories.
TOPICS DISCUSSED
- What specific attributes make the piece valuable?
- What is the best venue for acquisition?
- What is the best process for acquisition?
- When is it time to sell, where do you go and what do you do?
MODERATOR
Panelists
OUR HIGH-PROFILE CLIENT DIVISION
We understand the unique challenges facing our clients and can offer high-profile individuals a full suite of services, and related white-glove concierge support, on a global scale.
We’re experienced working with actors and celebrities, directors and producers, musicians, athletes, models, authors, journalists, and industry executives. Offering the high-quality, collection-specific solutions to help make informed decisions around the strategic, long-term management of fine art, jewelry, and other high-value collectibles.
Further Reading
- High-Profile Client Collections & Sudden Wealth Syndrome
- Helping the High-Profile Client Buy & Sell Smart
The Fine Art Group’s new Sports & Entertainment Specialty Practice and Director Shane David Hall have been featured in the Atlanta Business Chronicle Sports Biz Notebook.
To read the article and learn more about The Fine Art Group’s Sports & Entertainment Specialty Practice please access the link below.
Read the article.