Attorney At Law: Estate planning for artists and art collectors
By Nancy Burner, Esq.
Establishing a clear and thorough estate plan is essential for artists to maintain control over their artwork and preserve their legacy. An artist’s estate not only includes physical art, but a bundle of intellectual property rights, including copyrights. Additionally many artists have art collections that include others artists’ works as well as their own. The artist’s own art work is generally treated differently than their art collection, but both can be hard to value at death.
Generally speaking, at death one can dispose of these assets either through a Last Will and Testament or a Living Trust. With either document, an artist can specify not only who is to inherit a particular work of art, such as a family member or art gallery, but how the artwork is to be managed. For example, the artist can specify the proper storage and handling, appraisal, and insurance for the art work. Professional art appraisers and dealers can be hired to find buyers or exhibit the art to a wider audience. If doing so, it is important to set aside some estate assets to pay for the upkeep and handling of the art. If the Executor or Trustee is left to handle the art without any monetary resources, the plan will not work.
The main difference between a Will and a Trust is that a Will must be validated through Surrogates Court in a probate proceeding. Probate takes several months, sometimes years, for the nominated Executor to be officially appointed and imbued with the authority to collect the decedent’s assets, pay off any debts, and distribute the property to the beneficiaries according to the terms of the Will.
A Living Trust, in contrast, is a separate legal entity created during one’s life to avoid the probate process. Provided the art work and intellectual property are transferred into the trust during life, the trust assets will pass free from court interference at death, avoiding the costs and delay of probate.
Avoiding probate is often appealing for artists because artwork and copyrights are particularly difficult to categorize and value in a probate petition. In addition, using a trust ensures privacy whereas a Will becomes public information when it goes through the courts.
Further, a trust created during life can have provisions regarding incapacity, ensuring that precious pieces of art are properly cared for by the successor trustee in the event the artist can no longer maintain the works. Finally, some pieces of art cannot sit for the years it may take to go through the probate process.
The main advantage of a Living Trust is that it is not subject to continuing court oversight. If someone creates a trust for their art in their Will, any changes must go through the courts. For example, any change to the trustee would require court approval. Not so if the art trust was created in a Living Trust. A Living Trust can allow the beneficiaries to remove and replace a trustee without court interference. This is particularly important in artist estates where the Trustee is a professional instead of a family member. Many famous artist’s estate were mishandled by so-called trusted advisors. Avoiding the costs of litigation is reason enough to create a trust for artwork – especially if the artist is well- known.
An experienced estate planning attorney can help create an effective strategy for the artwork in your estate, ensuring your collection ends up in the right hands after death. Artwork can simply pass outright to beneficiaries if there is no substantial resale market. But, if the artist had established sales throughout their life, creating a trust or foundation at death to hold the art is the better route. As with any estate, the goal is to minimize in- fighting. Since art is so personal and cannot be easily divided, it is even more important to bequeath your works of art in a way that does not cause conflict.
Nancy Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.
