30 LONGISLANDPRESS.COM • JUNE 2018
PERSONAL FINANCE
ART INHERITANCE:
PICTURE PERFECT PLANNING
By SHERYL NANCE-NASH
Inheriting art can feel like hitting
the lottery. You have something of
value you didn’t expect or work hard
for. Depending on the piece, your
net worth can jump significantly.
It’s enough to get you excited for
sure.
Settle down. No doubt, this is a
good thing, a very good thing. But,
know that while your treasure may
have been “free,” that’s not to say
there are no costs.
Here’s what you need to know about
inheriting art.
FIND THE VALUE
“It is possible that the Picasso is
a copy with no value at all,” says
Jeffrey Greener, a trusts and estates
partner at the law firm of Rivkin
Radler in Uniondale. “There are
many appraisers out there and each
have different specialties, so doing
due diligence is warranted.”
He recommends choosing an
appraiser who is affiliated with
at least one of the three major
appraisal organizations: The
Appraisers Association of America,
the American Society of Appraisers
or the International Society of
Appraisers.
PROTECT YOUR ASSET
Once you know how much your
gift is worth, look for insurance.
Proof of purchase, invoice, and/
or an appraisal are needed to find
the insurable value, according to
Rosemary Whisler, an insurance
adviser with Cook Maran’s private
client unit in Melville.
“Depending on the appraised value,
it may be possible to include the
piece under your homeowners’
insurance,” says Jeremy Larner,
president of JKL Worldwide, a fine
arts consultancy in New York City.
“Alternately, you may want to insure
your art under a special policy
that covers a higher amount and
takes into consideration things like
breakage and movement of art.”
Also consider Art Title Protection
Insurance, which protects
against disputes that are related to
ownership.
Considerations include
determining how much coverage
to buy (for example, the full value
or some lesser amount), whether
that coverage will be a fixed or
“agreed value,” or whether you will
be reimbursed at whatever current
market value is at the time of the
loss. Greener explains that an
agreed value policy works well if
the market value has fallen but not
if it has increased.
Also, using an agreed value policy
may also require you to have your
artwork appraised from time to
time to ensure that you remain fully
covered. But be reasonable.
“Don’t overinsure for crazy values,”
cautions Jonathan Greenstein,
owner and operator of J Greenstein
& Co., a Cedarhurst company
specializing in Jewish art and
antiques. “That will only add to
your costs.”
Where should you turn for help?
“Always consult a reputable
insurance broker with experience
in the arena of fine art and one that
has garnered relationships with
the high-net-worth carriers, such
as Chubb, AIG, and PURE,” says
Whisler.
UNDERSTAND THE TAX
IMPLICATIONS
Another reason you need an
appraisal is for taxes. You need to
establish the fair market value of the
art as of the owner’s date of death
because you, the heir, will receive a
“stepped-up basis” in it.
“Essentially that means the built-in
gain in the piece is wiped out and
it’s as if you, the heir, purchased
the art for the then-current value,”
says estate planning attorney
Nathan Jones of Nathan Jones Law
in Missouri. “Later, if you sell the
artwork, you can pay significantly
less tax on any gain in value.”
Art that is appraised in excess of
$50,000 could be subject to a review
by the IRS Art Advisory Panel,
points out Larner.
BE DILIGENT
Keep a file on works of art, especially
those inherited. Are there receipts,
gallery correspondence, or any
family history related to that work
of art?
“It is excellent practice to keep this
information in a file, or directly
attached to the back of the work,”
says Graydon Sikes, director of
artwork at Everything But The
House, (ebth.com), an online
estate sale marketplace. “This
‘provenance,’ or ownership history,
is often critical to the value of a
work. A collector always wishes to
know any background information
about an object.”
Proper storage and maintenance is
a must. You want to preserve your
loved one’s legacy and at some point,
pay it forward.
Inheriting art isn’t as simple as hanging a picture on the wall.