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Framework for a Legacy: Your Art Collection & Estate Planning

The headlines are abuzz with a new world record for any artwork sold at an auction or privately. Leonardo da Vinci’s painting, “Salvator Mundi,” sold for $450.3 million (including the auction house fees) at Christie’s in New York to a private buyer, after an intense 20 minutes of phone bidding.

Why such a high price when the piece definitely had a good deal of scrutiny around it? For instance, it was major part of an art scandal known as “The Bouvier Affair,” was central in a legal dispute, and had been heavily restored. Additionally, it’s authenticity is doubted by some experts as not a work by the grand master himself, but perhaps his studio. Nevertheless, the piece was executed around 1500 on a commission for King Louis XII of France, was lost for centuries, and was not publicly rediscovered until an estate sale in the U.S. in 2005 where the piece, thought to be a copy, was purchased by a group of buyers for just $10,000. It’s thought to be one of fewer than 20 paintings known to exist by da Vinci. “Christie’s called the work ‘the Last da Vinci,’ the only known painting by the Renaissance master still in a private collection (some 15 others are in museums).”

All of this art excitement brings up an interesting situation to consider: how do you incorporate your art collection into your estate plan? Sure, you likely don’t have an authentic da Vinci, Renoir, or Klimt just hanging in your living room, but maybe you have a couple pieces you inherited or a growing modern art collection.

Value of a Passion

For most collectors the art isn’t about monetary value, but more so about a passion for a certain period, artist, or medium. Collecting is often an act of genuine appreciation for the fine arts. Considering both the intrinsic and market value of your art collection it’s ESSENTIAL you include it as a part of your estate plan. The collection is, after all, a part of your total estate’s value and they way it’s handled in your estate plan could impact the value of your gross estate in regards to the federal estate tax. When it comes to the estate planning goal of avoiding such taxes and fees the appraised value of your art is paramount to consider. Naturally you want your collection to be well-treated following your passing, as well as retain its value.

Let’s go through some important steps and elements to consider.

Assemble Documentation

Value of the collection will be important to the estate plan. If you haven’t done so already, you must correctly catalog, photograph, insure, and appraise the collection. You should also gather all documentation such as appraisals and bills of sale that will need to accompany the artwork as it changes hands upon your estate plan’s execution.

Weigh Your Options

With an art collection there are three main options for disposition within your estate plan (or to be executed during your life).

Donate

Donating your art to a charitable organization or a museum is an excellent way to practice smart charitable giving. It can also be one of the more simple options. Donate through your estate plan following your death and the estate will receive a tax deduction based on the current valuation. Give while you’re living and you can take an income tax deduction, also based on the value of the piece or collection at the time of the donation.

With this options you and the recipient organization should agree to signed terms and conditions BEFORE the artwork delivery. Details can include specifics as to where and how the art is to be displayed, if you want your name on the signage next to the painting, and similar details.

museum art collection

Bequest Artwork to your Loved Ones

Another common option is to keep the art within the family by passing along the art along to your estate’s heirs. Yes, you could gift each individual piece to each family member, but if you want to keep the collection in tact you could transfer the collection to a trust you create while living that can be updated and changed during your lifetime. A trust is a solid estate planning tool that allows your named trust beneficiaries to avoid estate tax and probate complications and fees. In the formation of your trust you can also define the terms for care and condition of the artwork.

You could instead bequest the collection to an entity like an LLC you create. In this case your heirs would own interest in the LLC instead of each owning a piece of art. In your estate plan and in the development of the entity you can appoint a manager (or multiple managers) who make sales or purchasing decisions for the collection.

framed art collection

Sell

It goes without staying that art is expensive—to buy and to sell. There are benefits (and detriments) to this option during life and after death, but waiting to sell until after death means the art’s value will be included in the estate. As such the capital gains tax could be lessened or entirely eliminated because the tax basis for the art collection is increased to fair market value at the time of death, instead of what you paid for the art/collection. If you instead would like to sell while alive you can likely expect to pay a capital gains tax on top of a sales commission fee and sales tax (among other potential fees).

black and white art collection

Give, gift, sell—whatever option you choose, select a plan that allows you to feel at peace with where and to whom your collection is headed.

Enlist an Expert

Regardless of what option you want to pursue in the disposition of your art work, you need to work with an experienced estate planner who can help navigate the complexity of your estate. It’s your estate planning lawyer who can help you establish a framework for passing along your artwork to your chosen beneficiaries.

Discuss With Your Family

Depending on your family dynamic, discussing your estate plan with your loved ones can be difficult. It can bring up emotion and hard topics like mortality, however to avoid litigation, mitigate in-fighting, and to help determine what’s the best course of actions forward for your property it’s necessary. When it comes to your art collection, your heirs may not feel the same way about the artwork that you do and knowing these opinions is critical in the decision of what to do with the collection.

When having the conversation, cultivate an environment in which your family can discuss openly and freely without judgement. You want their honest opinions as a part of your decision in what to do with your collection in the event of your passing.

art graffiti


Just as the art itself can be exceedingly complex, so can incorporating said art into an estate plan. You probably have questions; don’t hesitate to reach out at any time via email or phone (515-371-6077). I offer a free one-hour consultation and would love to help you protect your artistic assets through quality, individualized estate planning.

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8 Clauses That Should be in Every Executive’s Employee Agreement

Recently I gave a presentation to a group of professionals on “Essential Eight: Clauses That Should be in Every Executive’s Contract.” From my experience in nonprofit formation and compliance, it’s clear that great employment relationships start with smart employee agreements. This goes for both private and public, for-profit and non-profit, organizations. An employee agreement ultimately benefits both the executive hire and the organization as it can minimize risk for both parties. (Remember, an employee handbook is entirely different than an employee agreement and certainly shouldn’t be mistaken for one!)

A good employment agreement should clearly spell out the terms of the employment relationship and should include (in some form of wording or another) the following eight clauses highlighted below.

Executive employee agreement essential 8 Executive employee agreement essential 8 second half

Dispute resolution and forum selection sound a bit confusing? I would be happy to discuss these clauses in detail with you if you’re getting ready to hire a new executive, forming a new nonprofit, or are updating employee agreements. It’s never too early or too late to make sure you maximize the power of the employee agreement.

Contact me at any time to take me up on my offer for a free one hour consult.

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Thank You for Your Service: Veterans Day Estate Plan Discount

“True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost.” -Arthur Ashe

On Veterans Day and every day, we at Gordon Fischer Law Firm want to say a heartfelt thanks for our veterans’ sacrifice and service. We work with many veterans on estate planning and in work related to nonprofits, and it’s always an honor. There are not enough “thank you’s” in the world to express our gratitude for what you have done for our country. We would also like to extend this sentiment to first responders as well—police, fire, and EMS personnel.

Veterans Day flags

As a veteran your story is important. Your legacy is important. To preserve that legacy of strength and service, you need an estate plan to ensure your property and assets are distributed to your loved ones and favorite charities in accordance with your wishes.

So, in an attempt to express our gratitude we would like to offer 25% off the cost of an estate plan package to all Iowan active duty or retired service members and first responders. The discount will be honored through 11/30/2017. Contact me via email or by phone (515-371-6077)) to discuss your estate plan needs.

What does an Estate Plan include?

There are six documents that should be part of most everyone’s estate plan.

  1. Estate planning questionnaire
  2. Will
  3. Power of attorney for health care
  4. Power of attorney for finances
  5. Disposition of personal property
  6. Disposition of final remains

You should keep these documents updated and current. (Here are a few common “big” events that necessitate estate plan revisions.) Also, don’t forget about assets with your beneficiary designations. For most Iowans, that’s good – six documents, keeping them current, and also remembering about those assets with beneficiary designations.

American flag on chair

Cost of an Estate Plan

Because I want every Iowan to have an up-to-date estate plan I’m very transparent with the cost of an estate plan that that takes into full consideration YOUR situation. (This is why you need an experienced estate planner to draft your documents.) Speaking very generally, an estate plan from my Firm usually costs a single person about $700, and a family about $850. So, with this Veterans Day Discount, that’s a saving of about $175 for singletons to $212.5 for a family.

Estate Planning Process

I write about my process at length, but it’s just five steps! Seriously, it’s not that painful. My clients report back to me that they have such relief and peace of mind when it’s completed.

Veterans Day hot air balloonContact

If you’ve been making excuses or have an extremely outdated estate plan now’s the time to check it off your list (and get a discount while doing so!).

How to get started? Contact me by the end of the month (11/30) via email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077) and fill out my free Estate Plan Questionnaire.


DISCLAIMERS

The “Veterans Day discount” is only applicable for estate plans created by active or retired veterans and first responders (and their spouses). Availability of the discount ends after November 30, 2017 at which point prospective client must have contacted Gordon Fischer Law Firm and indicated an intention to make an estate plan.
Veterans Day discount merely relates to pricing and in no way creates an attorney-client relationship, nor any other kind of professional relationship. The Veterans Day discount does not create a contract or agreement of any kind.
Gordon Fischer Law Firm, P.C. retains full and total discretion as to who it chooses to serve as clients and why. Gordon Fischer Law Firm, P.C. retains the right to refuse service to anyone it so chooses.
The Veterans Day discount may not apply to individuals or families with a net worth of more than $1 million dollars. (You still need an estate plan, very much so, but it necessarily needs to be much more “complex.”).