Art Services: Fine Art Planning

A fine art collection can be a source of great personal enjoyment and pride for both you and your family. Because of its significant financial value, fine art can also create estate planning and legacy opportunities — as well as challenges — that are essential to consider. The Bank of America Private Bank Art Services group and our wealth strategists can help create planning solutions that are personally satisfying, tax efficient and sensitive to the varied interests of you and your family members.

Regardless of your collection’s value, it is important to determine what you would like to see happen to your artwork beyond your lifetime. Yet after investing time, effort and financial resources to establish an art collection, it can be challenging to consider the future disposition of what you have acquired. Art is intensely personal, and estate planning involving art can be a much more emotional process than when you are dealing with stocks and bonds.

If you do not specify your wishes as part of your estate plan, it is possible your collection could be sold off at your death — a potentially expensive option that can shortchange your heirs and deprive you of the opportunity to determine what will happen to your cherished holdings. As the following profiles illustrate, the Art Services group can help you understand the various planning options available to you, including:

• Gifting to family members, either directly or indirectly
• Donating the art to a charitable institution
• Creating a permanent museum

CASE STUDY

Incorporating art — and minimizing conflict — in an estate plan

Our client had collected several significant and valuable pieces of contemporary art. She had assumed that, upon her death, her three daughters would divide the collection among themselves. However, one daughter was an avid collector and interested in inheriting particular pieces, while the other daughters would have preferred to sell the collection and receive a cash inheritance, creating a potential source of conflict among the sisters.

Solution: The Art Services group suggested an expert appraisal of the individual pieces. The total value of the seven pieces was $30 million, but pieces of interest to the young collector were worth significantly more than the others. After discussing the situation with a Bank of America Private Bank wealth strategist and her attorney, the mother modified her estate plan to designate the specific pieces that each daughter would receive. The plan specified that the daughter collector would inherit the pieces she desired. But in the interest of fairness, the other two daughters would receive an additional $1 million each in financial assets, balancing the value of the inheritances.

CASE STUDY

Keeping a collection in the family in perpetuity

Our client had moved his modern art collection from his primary residence to his family’s vacation home so the entire family could enjoy it. The client wanted his family to retain possession of the collection in the home as a source of pride and inspiration for decades to come, but wondered which structure would be most effective for transferring ownership of the collection to the next generation.

Solution: The client wished to keep his collection together and had already decided against giving individual paintings or interests in specific pieces to family members. Instead, the client’s Bank of America Private Bank wealth strategist suggested placing the $80 million collection in a limited liability company (LLC). Transferring ownership of the collection to the next generation was simplified by leaving interests in the LLC to designated family members. Any future decisions to sell art would be subject to discussion and then voted on by family members owning shares. Similarly, decisions about whether to reinvest in other art or distribute proceeds from any sale would require broad agreement among the LLC’s owners. With this plan in place, the client was confident that his collection was far more likely to remain intact and that any major changes would be carefully considered from multiple perspectives.

CASE STUDY

Establishing a museum to house a unique fine art collection

Over the course of her lifetime, our client had assembled a substantial collection of Impressionist art. Because her family did not share her passion for art, she sought ways to preserve the $100 million collection in its entirety while passing other assets to her heirs.

Solution: Although one of our client’s goals was that her collection would always be on view in its entirety, no museum was willing to make this guarantee. A Bank of America Private Bank wealth strategist and other advisors evaluated various options with the client, and she determined she wanted to establish a new museum. Now completed and open to the public, the museum focuses on themes that are important to the client and represented throughout her collection. The client used additional financial assets to fund construction of the museum and to establish an endowment for operations, as well as any future acquisitions. Given the scope of the client’s collection and the architectural quality of the facility, several collectors have discussed making gifts that will extend and complement the client’s collection.

CASE STUDY

Creating a lifetime philanthropic legacy

For many decades, our client has been a committed supporter of museum-based art education programs as well as several nonprofit educational institutions — in terms of both direct involvement and financial contributions. The owner of an extensive range of fine art, she wanted others to learn about art through her collection. Her plan, upon her death, was to divide her collection among the nonprofit institutions and museums she worked with and to support the gifts with a financial endowment to be used for educational programs.

Solution: The Bank of America Private Bank Art Services group and the client’s wealth strategist understood her goals and recommended a route to helping achieve them. They suggested that she make a financial gift to one of the nonprofits now and donate a portion of her collection to one of the museums at the same time. By doing so, she would generate an income tax deduction and reduce the value of her taxable estate by $6 million. Of even greater interest to the client was the opportunity to share her art during her lifetime so others could experience it with her. Working with one of the nonprofits, she helped to organize a touring art education exhibition of the work to underprivileged schools where students were unlikely to have experienced art of that quality before. By refocusing part of her strategy in lifetime gifts, she gained significant financial benefits and the personal satisfaction of seeing her educational goals achieved.

THE POWER TO

imagine, illuminate and inspire

At Bank of America, we believe in the power of the arts to help economies thrive, educate and enrich societies, and create greater cultural understanding. That’s why we are a leader in helping the arts flourish across the globe, supporting more than 2,000 nonprofit cultural institutions each year.

Our arts support is wide ranging. We believe the neighborhood playhouse can be as important as the world-class museum or orchestra in its value to the community, in the lives of its citizens and in the education of its young people. A key component of our arts program is to help nonprofit institutions illuminate varied cultural traditions and to help the arts sector create pathways for more diverse employment and engagement.

The Bank of America Art Program is part of the company’s commitment to grow responsibly while bringing value to economies, society and the communities we serve.

To learn more about our arts support, please visit bankofamerica.com/arts.