Death and Taxes
“In this world, nothing is certain, except death and taxes.” – Benjamin Franklin in a letter to French scientist Jean-Baptiste Le Roy, 1789.
Estate Planning for Art Collections
Private art collections often represent some of the most valuable assets in an estate. If you’ve spent many years building your collection, it may be time to assess how taxes can affect it after your death. Creating an estate plan for your collection can help reduce your estate’s tax burden and simplify the process of transferring ownership. Below, our firm outlines how art collectors can ensure their collections are preserved according to their wishes while facilitating seamless ownership transitions. [1]
Taxes on Art
In the United States, federal estate taxes are calculated based on the artwork's fair market value at the time of the owner’s death. The government imposes federal estate taxes on a decedent's entire estate, including art, cash accounts, real estate, securities, and annuities. The current estate tax threshold for 2025 is $13.99 million for individuals and $27.98 million for couples. [2]
If your estate lacks the liquidity to cover this tax burden, your heirs may need to sell several items to pay estate taxes. Furthermore, the art or antiquities that might be sold to settle estate taxes are also subject to a capital gains tax of up to 28%.
The following states also impose estate taxes at the state level: Illinois, Washington, Oregon, Maryland, Vermont, Connecticut, New York, Rhode Island, Massachusetts, Maine, Hawaii, and Washington D.C. [3]
Options to Mitigate Your Tax Burden
The first step our firm recommends for estate planning tailored to art collectors is to create a comprehensive record of your entire collection and appraise each piece to determine its current fair market value. After cataloging and appraising your collection, our firm will provide recommendations based on your wishes and needs. Below are some options we frequently suggest to our clients to mitigate taxes that may be imposed on their art collections. [4]
1. Trusts. Placing artworks in a trust allows collectors to control how the collection is used or sold. Trusts can also reduce estate taxes and keep details about your collection private.
2. Leaseback through an LLC. An LLC sale-leaseback allows you to sell an artwork to an LLC that holds the artwork in a trust for your heirs. You then may make regular lease payments in return for continuing to display the piece on a wall of your home, thus the art is then out of your estate.
3. Comprehensive Will. A comprehensive will that outlines your wishes for each art piece can avoid complications after your death.
4. Charitable Gifts. If you are a long-time donor or a member of the board of trustees of a museum, you may wish to donate pieces from your collection to support an institution of your choosing. Additionally, these donations are fully tax-deductible.
If you’re interested in learning more about estate planning for art collections or any of our other services, please contact our office today by completing our consultation form below.
[1] What Art Collectors Should Know About Estate Planning. https://www.texastrustlaw.com/what-art-collectors-should-know-about-estate-planning/. (Last Accessed: April 10, 2025).
[2] All About the Estate Tax. https://smartasset.com/taxes/all-about-the-estate-tax. (Last Accessed: April 10, 2025.)
[3] The Art of Tax Law and Art Law. https://www.flblaw.com/the-art-of-tax-law-art-law-strategies/ (Last Accessed: April 10, 2025).
[4] What Art Collectors Should Know About Estate Planning. https://www.texastrustlaw.com/what-art-collectors-should-know-about-estate-planning/. (Last Accessed: April 10, 2025).
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