Gregory Herman-Giddens, Attorney and President at TrustCounsel recently posted this news regarding the 2012 Estate Tax rules. This is important for all Appraisers to know, since we are the ones called in to determine the Fair Market Value of Art, Antiques and Household contents.
If you are a collector, it can become vitally important for your estate to have a recent Fair Market Value Appraisal by an IRS Qualified Appraiser. Knowing what you have and the current market value is an important part of a thorough Estate Planning strategy.
There are many reasons and uses for a Professional Art Appraisal and not everyone needs one. A reputable appraiser will be straightforward with you if you truly do not need an appraisal. Value matters and a Professional Art Appraisal can save you and your family valuable time and money by protecting your assets and accurately valuing and documenting what you have. Many heirs are left with artwork and antiques they know nothing about, and are unsure where to begin and often unknowingly give away the most valuable pieces of a collection, simply because they don’t know what they have.
Knowing where to begin and when you need to have an appraisal will help ensure a seamless transition of your valuables, and protect you in the unfortunate event of a loss. It is important to work with a professional Appraiser, one who is in good standing with one of the three nationally recognized Appraisal organizations and regulated by the Appraisal Foundation of America. For more information on the Appraisal Foundation and Credentialing, please visit http://www.appraisalfoundation.org
- The International Society of Appraisers – ISA
- The Appraisers Association of America – AAA
- The American Society of Appraisers – ASA
- Insurance – Replacement cost
Most Insurance companies will require an appraisal for items valued over $5000, but some as low as $2000 and others more accustomed to fine art coverage like Chubb Insurance, only require an appraisal on items over $50,000. Check with your insurance carrier. All insurance claims will require two things:
a. Proof item existed
b. Value of item at time of loss
2. Charitable Donation
According to IRS Regulation 561, all artwork donations must meet specific criteria:
a. Must be to a non-profit organization whose mission is in alignment with art
b. All items over $5000 must have an accredited art appraisal from a “qualified art appraiser”
3. Estate Federal Tax Liability – 2011 – estate valued over $5,000,000
Each state varies on estate tax rules, so check with your accountant for your state. Some states, such as Oregon collect estate taxes on estates valued over $1,000,000.
4. Equitable Distribution – This is an important part of estate planning and can help eliminate painful and costly family disagreements. An impartial expert determines the Fair Market Value of all of the Artwork and other appreciable assets so the family members are not left to guess or assume value.
b. Family distribution
c. Business or partnership dissolution
5. Re-sale Value
How much can I get for this item, and how do I go about selling it? It is important to know the Real Fair Market Value of an item you are selling. Many people make the mistake of selling a very valuable painting for far less than its current market value, losing thousands of dollars. On the opposite side, people are confused and disappointed when something sells for far less than what they “think” it should be worth. An Appraisal is not a guess, it is a Professional Opinion of Value, based on research, sales comparables and years of experience in the business.
6. Moving/Damage Claim
If the moving company damaged a work of art, is it repairable and how much will that cost? What is the replacement cost if completely damaged?
7. Bankruptcy and Disillusion of a business – what to do with the assets?
Many Banks are now being presented with significant artwork collections seized from bankruptcies and need help evaluating the collections as well as determining if anything is of significant value, and lastly, what to do with these “assets”? Should you sell them all in an auction or should some pieces be privately sold, and if it is an option to keep any of the works or donate them to charitable organizations and receive a tax break.