COURT RULING FAVORS ART COLLECTORS AND THEIR BENEFICIARIES

Art collectors in Florida could find a recent appellate court ruling regarding a deceased collector in Texas interesting. He and his wife had collected 64 works by Picasso, Jackson Pollack, Cezanne, David Hockney, and more world renowned artists with a stipulated fair market value of$24.6 million.

The family of the collectors recently received a $14.4 million refund of estate taxes as a result of the decision by the U.S. Court of Appeals for the 5th Circuit. This equates to a 47.5 percent discount from the U.S. Tax Court’s initially proposed 10 percent discount. The couple had used a variety of methods to reduce their ownership in the various works, which led to the refund that is being donated to the family’s $210 million foundation for the purpose of carrying on their civic legacy.

Well-to-do families, who own expensive artwork, face several issues. The first is that selling their artwork during their lifetime will result in a 28 percent capital gains tax imposed on the appreciation. Secondly, in the event they simply hold on to the artwork until they die, their value will become part of their estate at full market value. This could trigger huge estate taxes for their beneficiaries. And, although many are advised by their estate planners to sell, donate or give away their works of art while still alive, many feel like they will have already died if they end up with nothing but bare walls.

Florida residents who have concerns regarding their estate value , and the valuation and taxation of works of art that they have collected, could find the advice of an estate planning attorney to be helpful . This recent ruling could affect their decisions in that area.

Share this on...Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Email this to someone

Written by Luis E. Barreto

Luis E. Barreto

Luis is a probate and guardianship litigator with over 23 years of experience in the field. Determination of heirs, will contests, breaches of fiduciary duty, removal of personal representatives, guardians and trustees are just some of the types of litigation he addresses. In addition, he administers non-contested estates and guardianships.