Preserving the artist's heritage
What Do Inheritors Do With Art Work?

by Anne Kaplan, Founder, Senior Artists Initiative
Technical assistance from Robert H Louis, Esq and Jeffrey P Fuller, ASA, art appraiser

Most artists are very resistant to sorting through their work in order to decide what to keep, what to throw away, what to give to institutions.  This creates a dilemma after an artist’s death, as it leaves painful decisions about the distribution of the work to the spouses, family members, or executors. Failure to sort through and distribute works during an artist’s lifetime has resulted in work being stored for years; large numbers of the work going on the market and selling for very little; or the work just disintegrating in a damp, too hot or too cold basement or attic. If the deceased artist is of world renown, the spouse will probably have gallery and financial support to properly inventory and archive the work.  Even in these cases, there can be a tremendous amount of work to be done and it often takes years to distribute the estate.  Artists’ Estates, Reputations in Trust by Magda Salvesen and Diane Cousineau, documents the stories of families of well known artists who have done this work.  It is interesting to read but probably not helpful to those of us who were related to lesser known artists and who therefore have to find other avenues for distributing the estate.

One of the projects of Senior Artists Initiative is to work with selected artists over 55 years of age, helping them inventory their work and making a videographed documentary of their lives.  In the process of this project, we encourage these living artists to organize their work, throw away what they think is not the best representation of their achievements, and begin to approach organizations about accepting art work for their collections.  At this time, there is no tax advantage to giving the work away, but there are the enormous benefits of having the work in places selected by the artist and of adding to a resume museums or public institutions owning the artist’s work.  It is important for living artists to take responsibility for making these decisions and acting on them.

This does not, however, help the spouse, executor or children of artists who have died leaving a disorganized body of work for the survivors to sort through and disperse.  Following is some advice to survivors of artists about the process of organizing and dispersing the work; but it is not a substitute for seeking professional advice about your situation.

In the Commonwealth of Pennsylvania, laws govern the distribution of a deceased artist’s work and other assets if the artist has not provided for their disposition through a will or trust.  If the artist had children, generally one half of the assets are given to the spouse and one half to the children.  Most people, however, choose to have a will, so that they know how and to whom assets are to be passed.  Assets, including art works, that pass to a spouse are free of inheritance taxes in Pennsylvania.  If children inherit, they are taxed at the current rate of 4.5 %.  Transfers to other individuals may be taxed as high as 15%.  Amounts passing to charity are free of tax.  An estate in excess of $2,000,000 (in 2006) might be subject to federal estate tax.  A discussion of that tax is beyond the scope of this article, but if inheritance tax is to be paid, it is essential that an appraisal be made of the value of the artist’s work.  Taxing authorities will want to know the value of the assets transferred, and will not accept the family’s or executor’s estimates
In the case where everything passes to the surviving spouse, and no inheritance tax due, an appraisal is still needed because it establishes the date of death value of the art works, which is the basis for determining income when the art works are later sold.  This can save you taxes later, so it is important for the spouse to have an appraisal of the art works. It is essential to find a lawyer and an art appraiser familiar with artists’ estates, as this is a specialized field. Before appraisal is made, any work that is damaged, of poor quality or otherwise needs to be disposed of should be removed and destroyed.  It can also be helpful for artists to make gifts of work to children, friends, non-profit institutions, etc, during their lifetime, and  to remove those gifts from the artists’ residences.  A gift is not a gift unless it is in the possession of the recipient, and the transfer reduces the work to be dealt with.?

Gifts made to charitable institutions after the death of the artist are eligible for charitable deductions for federal income tax purpose.  Owners of the art works can deduct the fair market value of the work, and charitable deductions to recognized institutions can amount to up to 50% of the individual’s adjusted gross income.  There is no charitable contribution deduction for Pennsylvania personal income tax purposes.   An appraisal needs to be made of those works being donated to charitable institutions at the time of the gift.  It is often the case that elderly artists have not had recent sales of their works.  An experienced art appraiser can estimate fair market value even in such instances.

The process of donating work to non-profit institutions is somewhat time-consuming, but can involve the donors in interesting communication with museum directors, curators, and other ?decision makers.  The artist may have had a fondness or connection for a particular institution, ?which might be very happy to receive work to be displayed throughout that institution.  Museum directors and curators are usually willing to consider gifts of work when approached with slides or digital photographs of work, curriculum vitae, catalogs, etc., describing the artist’s work and career.  Good places to find museum information are in the Art in America Annual Gallery Guide, and in the Official Museum Directory, both usually available in libraries.  If the artist did not have good quality slides or digital images of the work, arrange for that documentation, keeping the originals in your files and sending slide copies or CDs to the institutions; they are usually happy to return the images to you.

The Metropolitan Museum, Philadelphia Museum of Art, or the National Gallery are not the first places to go when seeking a home for art work.  Smaller museums are often more likely to display the work and more interested in local artists.  The first step is to write to the director, curator, or other appropriate person at the institution, sending information about the artist, slides or CD of available work, information about how to access the artist’s web site if there is one, and how to be contacted.  The response might be immediate or might take weeks.  When there is a positive response to the offer of gifts of work, the work needs to be appraised, and then sent to the institution.  There is usually a selection committee that must give final approval to these gifts, and those committees may meet only two or three times a year, so it is important to inquire when a final decision will be made.  The institution to which you are donating works of art will send you a deed of gift.  Generally this document must be signed by the donor and returned to the institution.  The date of this deed of gift becomes the effective date of the gift, and accordingly the year in which the donor has made the gift.  ?It is the donor’s obligation to find an art appraiser to set the fair market value of the gift.  Look at the IRS website, to see their Form 8283 and instructions for that form.  Depending upon the value, you may need to have an art appraiser value the gift.  In that case, the appraiser will include the appropriate information in the IRS Form 8283 Section B, Parts I and III.  You then send Form 8283 to the receiving institution, which will acknowledge receipt of the gift by signing Section B, Part IV and returning the form to you.  This form (with appraisal when necessary) is included with your income tax forms.

Any individual can give up to a maximum of $12,000 in gifts to any individual, annually, without using up any of the individual’s lifetime gift tax exemption.  Additional gifts up to a total of $1,000,000 during life result in no gift tax.  Thereafter, gift tax would be payable.  But remember that there is no gift tax for gifts made to charitable institutions.   Once an individual has received a gift of art work, the recipient can then in turn pass that work on to non-profit institutions after having had the work in their possession for a reasonable period (6 to 8 months minimum) and can then deduct the value of that gift as a charitable contribution, following the same instructions above as to filing Tax Form 8283.

It seems complicated the first year an inheritor goes through this process.  It becomes more routine through practice.  So, to summarize, inheritors of art work need to:
1.  Find an estate lawyer and a reputable art appraiser who are familiar with artists’ estates.
2.  With the help of an artist friend or knowledgeable person, go through the art work and dispose or put aside that work that is damaged, flawed, or of minor value.
3.  If the work has not been documented or if the documentation is of poor quality, make slides or digital photographs of work to be distributed.  Keep the originals in your files.
4.  Approach non-profit institutions to ascertain interest in receiving the artist’s work  Allow six months for this process.  It takes time for institutions to make these decisions.
5.  Use a tax preparer who is familiar with regulations concerning art work as a charitable deduction.
This is a slow process but there is satisfaction in finding good repositories for the art work you have inherited.