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Estate planning around an art collection

For those in New Jersey who love and collect art, consideration must be given to how those assets will be handled in the event of the owner's death. Many people spend a great deal of time and money building their collection, which often increases in value over the course of time. Determining how to pass that wealth down to loved ones is a serious estate planning matter.

The first step is to secure the services of a professional art advisor. This is an individual who is trained to assess your collection and give an overview of its value. Even more importantly, an art advisor can provide insight into the tax consequences of various estate planning options.

Tax issues are important, because an heir who inherits your beloved collection will also inherit the tax ramifications of owning those pieces. No one wants to burden a loved one with a heavy tax bill. This can also lead to the risk that the collection will be broken up in order to sell certain pieces that can cover the tax bill. Buyers can and often will sniff out a desperate seller, and an heir can end up accepting a price well below a piece's actual worth.

An additional consideration involves where the collection is housed. Heirs of individuals who have pieces of art stored or displayed in other countries can encounter significant difficulty in regard to taxation. This adds yet another layer of complexity to the issue, and further underscores the need for professional guidance. New Jersey collectors must take all of these factors into consideration when determining how to integrate their art collection into the estate planning process.

Source: The New York Times, "Estate Planning Can Get Tricky When Art Is Concerned", Conrad De Aenlle, Oct. 1, 2015

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