Is your art collection prepared for a crisis and for the aftermath?
When crises like natural disasters hit, we are usually not given the luxury of time to prepare in the midst of the chaos. The global COVID-19 pandemic has been the opposite—leaving us with plenty of time to get our investments in order.
Sheltering-in-place has given us the gift of more time at home. People are jumping on tasks that they’ve put off—like cataloging their artworks and preparing estate plans and wills. For instance, in the month of March, we saw a large influx of collectors and art professionals coming to Artwork Archive to manage their artworks.
During this time of social isolation, collectors are taking inventory of the artworks that surround them in their homes. Or, they are realizing how important it is to have access to information for places that cannot be reached physically, like second homes or storage units.
When times are uncertain we think about the future and how our legacy will be handled. Here is how to prepare your art collection and investments for a crisis and the aftermath.
Take inventory of what artwork you own.
There are already so many risks during this time of a global pandemic. Take control of what you can control with your art investment. Implement a documentation strategy and avoid risk.
“No matter how many pieces you have, you should keep excellent records, and it’s most efficient to keep it in a database” recommends Kimberly Maier, representative of the Association of Professional Art Advisors (APAA).
These records include provenance, bill of sale and appraisal records. A database of your provenance documents and images will be your first resource in the tragic event of theft, fire or flood damage, and any unpredictable loss.
Your inventory records are also an important tool for those responsible for your estate after your death. It provides them with all the information about your individual pieces and your collection as a whole.
What you can do right now: It can seem overwhelming to inventory an entire collection, so we recommend working backward. That way you’ll start with the art that is freshest in your mind. And, you'll have details on hand for questions about recent acquisitions. Then you can take a trip down memory lane and archive your older pieces. Catalog your artworks in an online art collection management system.
Ensure your works’ authenticity and value are recorded and easy to prove. Advisors and appraisers consult provenance to confirm an artwork’s legitimacy. The recorded history of the artwork’s owners and whereabouts is the first step to confirming its creator and origin, which is especially helpful when the artist is no longer living.
You’ll need to record the title, artist name, dimensions, creation date, price, medium, and subject matter to have a detailed provenance record for each piece. There is plenty more information to add to your piece record if you wish: the work's condition, signature notes, acquisition details, etc.
What you can do right now: Scan the paperwork to create a digital record. And store that information in an online art inventory database like Artwork Archive so you have access to it from any device.
Keep track of your artworks' value and appraisals.
To understand the value of the pieces in your collection, keep accurate and up-to-date appraisals of each piece. The most updated values and appraisals are what you will be reimbursed for through your insurance if you have to file a claim. With an online database, you can easily generate a comprehensive financial report for your insurance company.
And if your artwork is being dealt with after your death, you'll want to make sure proper values are assigned to your artworks. Your attorney most likely won’t be an expert in the art market.
What you can do right now: Identify what works need an appraisal. It’s recommended to get your artwork appraised every five years. Add your appraisal details and documents in an inventory database so that they are readily available.
Ben Medanksy, Shadow Study III (Wall Mount)
Photograph your art.
While this may seem obvious, it is tempting to type in the artist name and title of a piece and be done with it when creating an inventory. Don’t fall for that trap! It is so important to have an image of your work, especially at this time when we aren’t as mobile and the piece may live in a separate building, second home, or resides in another part of town.
As the years go by and your collection grows, it can be easy to forget which painting goes with what title. It’s also nice to have beautiful, high-quality images of your work to send to those managing your estate (accountants, attorneys, art advisors) as well as potential buyers and galleries if you are looking to use your art as a liquid asset. You can quickly send them the images using the Artwork Archive inventory report or portfolio page feature.
What you can do right now: Start photographing your works. Can’t bring a photographer into your home right now? Not a problem. Here are four easy-to-follow steps for photographing your art like a professional.
Get your transaction documents in order.
Gather information. Make sure that you have the documents that support the authenticity and value of your artworks on hand. Those documents include:
Bills of sale
Art loss check
Photography (make sure you have photos of the front and back of the piece)
Supporting literature, i.e. catalogue raisonnés
You can learn more about each one of these documents here.
What you can do right now: Make sure you have digital copies of all of these documents, and upload them into a digital database like Artwork Archive.
The advantage of using a collection management system is that all of those important documents are in one place and associated with the artwork. Plus, you don’t have to worry about natural disasters destroying paper copies.
Include your art collection in your will.
A complete estate plan services your entire estate—all of your possessions and assets. Your art collection is just one piece of the puzzle. You’ve spent a lifetime building up an art collection you cherish, it’s time to properly protect and preserve those assets.
What you can do right now: If you live in one of the 23 states that have enacted remote online notary (RON) laws, you can get your will notarized after updating it with your art collection.
Discuss your estate plan with your family members.
One difficult conversation to have is discussing the future of your art collection with your children and relatives. While no one wants to discuss or prepare for when you are gone, or for when a crisis happens, there is a chance your heirs are not interested in maintaining your art collection. Instead, they may prefer selling it.
“Have a candid conversation with each child about which pieces have sentimental value to you and to them,” Mark Van Mourick, president of the wealth management firm Optivest, Inc., suggests. “Phrase the question in a way that gives them the freedom to respond honestly and remember not to get offended by their response.”
Once you have established how your family members feel about your art collection, you can begin making plans for the future. The goal of creating an art estate is to ensure that your collection is taken care of and in a place that makes you feel comfortable.
What you can do right now: Hop on the phone or gather the family together with a virtual meeting service like Zoom or Google Hangouts.
Decide who will manage your art when you’re gone
Determine who will be willing to participate in the execution of your estate plan. It’s important to know if you need to bring in assistance, like an art advisor.
“It is good to establish who you trust to appraise the collection and/or sell it upon your death (if your heirs do not want it),” Mourick elaborates. “These advisors can assist in their areas of expertise and relieve the family of a potential burden after your passing.”
What you can do right now: Learn more about the role of art advisors here.
Selling your artworks? Be prepared.
Art is a liquid asset. Selling artwork is a way to bring in cash. But, selling art is more expensive than selling other assets. The capital gains tax on art and collectibles is typically 28% opposed to the usual 20% (source). You will also be responsible for paying a sales commission, taxes, and possibly shipping.
If you decide to sell your artworks during your lifetime or after, start having conversations with auction houses, galleries and art dealers. Get to know the commission that each takes from the sales price. Carefully review each of the terms and conditions, and fees.
Here are some of our tips when selling your artworks.
What you can do right now: Set your collection up for success. Keep track of auction houses, galleries, art dealers and other potential sellers of your artwork. Add their contact information and any notes in the Contacts tab of your Artwork Archive account.
Prepare your works for sale. Make them “retail ready.” Line up the necessary documentation including provenance documents, artist name, materials used, recent appraisal, and dimensions, which can all be exported from your Artwork Archive collection inventory. A dealer or auction house will use this information to outline the costs of promotion and commission. These documents will also determine how to file your taxes. If you’d like your works to be sold after your passing, include clear instructions for the future caretaker.
Create an itemized record of your art collection.
This is important during moments of crisis like theft when you need to prove that the art was yours and where it was located before it was stolen. Your insurance company will need this information when you file a claim.
The list is also helpful for estate planning when your executors are handling your estate and cannot ask you about location, value, etc.
And when the world goes through a global pandemic, things can get chaotic. Avoid lost artworks while your mind is occupied with other matters. Your art inventory will let your estate executor know when something has gone missing and provide them with the documentation to assist in its recovery.
What you can do right now: Create an inventory list with the history and financial details for each piece. This can be done with a few clicks of a button from your Artwork Archive account.
Share information and access.
In times of crisis, everyone is quickly searching for information. You can prepare for this ahead of time and give those managing your estate access to your art inventory—attorneys, family members, etc. Dynamic databases like Artwork Archive also give view-only access to accounts.
What you can do right now: Add users to your Artwork Archive account. Grant editing or view-only access. Send the inventory reports you created from the step above, and send them directly from your account to stakeholders.