Art Stewardship Matters revised

Art Stewardship Matters?

Maybe you are a driven art collector or have amassed collections through unforeseen circumstances. Either way you are likely wondering what you will do with the collection or how it will be distributed to others who appreciate it. Many before have felt overwhelmed or haven’t been properly informed on the options and logistics unique to collectors.?

The United States federal taxes on all collectables currently starts at 28% and individual states may tax them on the local level as well.?In addition to the sales tax issue, selling some or a large portion can have significant negative affect on other income and benefits such as Social Security or Veteran’s benefits.

The costs of maintaining a collection have also increased with insurance costs, storage fees, appraisal fees, accounting fees, legal fees, and consulting fees all on the rise.?While many small value collectors have ignored or opted to not pay these ongoing fees, higher value portfolios have increased risks and challenges. Collectors and artist are waking up to the need to raise money.?One overlooked option is longer-term loan of your collection to local museum (assuming it is something they would like to display) where they store it and protect it and insure it while in their possession.

Over the years I have watched many television programs such as “Antiques Road Show” or “American Pickers” or “Pawn Stars” and there is a recuring story- “my family is not interested in these things.”?Maybe you are like some of the collectors I have met over the years that have a spare bedroom, attic, or storage unit filled with art and/or valuable collectables. Perhaps you know the value of the art but do not wish to enter the complex world of “exiting” and so continue dealing with legal, tax, accounting and insurance.?Again, you are not alone here.

The good news is there are more ways to “exit” art and collectibles than ever before.?Popular ways to exit a valuable piece or even (part of or) an entire collection include selling, donating, giving it to it others, along with less common strategies.?

Utilizing auction houses, either local or national, have some logistical issues or complexities that scare many collectors. Many are surprised by the cost of packaging, insuring and shipping art. As are they with the slow time frame to auction various pieces. Once the pieces reach the auction house, fees commonly range from 15% to 30% and many higher end auctions often want appraisals and strong documentation as well. A national auction house I recently spoke to estimated the time between sending off the art to collecting after the auction to be around two years. Why? Auction houses must identify the ideal time and location of the auction to optimize earning potential before the extensive marketing can even begin. ?After the auction, collection of payments and getting past the period of refusal adds delays.?One resource I have utilized is liveauctioneers.com they consolidate your searches to include many auction houses instead of logging into several different auction houses.

You want to explore your options, in terms of which auction house to use as this can make a huge difference in pricing and experience. Recently I drove a painting to local auction and was told expect a realistic range of $500 to $800. I did not place it. Instead, I emailed a photo of it to another auction house, that specialized in that artist, and they offered cash $2,500 with an expected range of $4,000 to $5,500 in auction. Do the research to find the high-volume dealers in that artist.?They will often provide stronger results.

Have you considered settling your art on the walls of businesses where you live? Café, dinner, office building, co-op galleries are some examples. There are many online art storefronts and portals to upload and sell art. Before you starting signing up for several of these do some research on the site and the rules and terms of sale. You may have a traditional landscape and the site your posting might be geared towards completely different taste in art.

There are a variety of charitable options available as well and there are more ways to connect with others who could be potential recipients, buyers or exchangers.?However, the landscape to navigate the complexities have only increased as well.?Would you consider gifting some of your art to professionals that can help you in the process as opposed to coming up with cash to pay them?

Have you considered getting more involved in art groups and community groups that appreciate art and collectibles? One overlooked exit strategy is trading some of your art with other art collectors. Maybe you have a collection in the garage that will likely be ruined overtime, so why not clean out and trade with others? Perhaps consider joining a barter network to exchange or barter out art or collectibles for other items you value in the network. There are even networks of barter companies, globally, that maintain significant amounts of money or credits, siting in barter member accounts, that could be used to buy your artwork. Practically speaking you sell to one member and then use your credits to buy goods and services you need. Credits can buy vacations and much more.

One of the newer ways to monetize art or collections is NFT aka Non-Fungible Tokens.

Webster’s : a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership.

Another unusual exit is that of fractional ownership, where some of the ownership is sold off to other investors. Usually for high end art (above seven figures) it is offered through a mutual fund type setting, specific to art. Here is a Worth Magazine article which describes fractional ownership in more detail. ?Some artists have been marketing geniuses as they create art big businesses spend big money on, in a leasing exit strategy. Andy Warhol, for example, painted iconic pieces to create pop art for labels like Coke and Campbells Soup. Musical and cinematic artist do the same thing; mentioning brands or creating something for companies to own or lease.

Do you have good documentation: receipts, certificate of authenticity or historical transactions of your art? Have you revised your inventory and updated the details of your collection? Having an accurate current inventory and details will also aid your estate settlement too.?Have you spoken with consultants who have either brought ideas of exiting to you specifically or general methods of management??Having an open mind to exit strategies and what works for you and your family matters. Email me at [email protected] or call me at 407-644-9411 ext. 2 to discuss your collection and some viable steps to add value to your decision-making process.