Creating a plan for estates that include illiquid assets like art collections requires careful planning and specialized knowledge. Depending on the value of the collection, heirs may end up with an unexpected tax bill that could take a big bite out of their inheritance.
If your parents collected decades of issues of old magazines, it's likely that they are of no interest whatsoever to you or your siblings, and the magazines will be tossed out after your parents pass. This is often the case when parents accumulate collections that are near and dear to their hearts, but have no market value.
However, an art collection is different because works of art can be extremely valuable.
As the New York Times points out in "Estate Planning Can Get Tricky When Art Is Concerned," art collections require very careful estate planning. The biggest issue is that art is illiquid. If the estate tax is due, then the heirs have to come up with cash to pay it. This requires them to use other estate assets or to sell the art.
Unfortunately, it is not always quick or easy to sell art, and heirs who have little interest in art are often taken advantage of by professional dealers. The good news is that tax authorities will often accept low values for art collections as the true market value is difficult to assess.
If you have an art collection, it is extremely important that you have an estate plan for it. The last thing you want to do is just leave it to your heirs to figure it out. Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney to navigate these waters.
Reference: New York Times (October 1, 2015) "Estate Planning Can Get Tricky When Art Is Concerned."