Five Questions: Von Sanborn on Art Law, Insurance and the IRS

Sanborn, an art attorney, recently joined Day Pitney in Hartford.

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  • William Fleischer, CIC

    Von Sanborn information is spot on. Most collectors find themselves in a predicament where the value of the Art increased way over the original purchase price, hence causing a potential estate tax situation. As a Certified Insurance Counselors (CIC) and over 327 hours of Continuing Education, and National Art Insurance broker, representing “A rated” Art Insurance companies, I work on collection which he talks about. One point I like to express. Not from a Tax side, but from the transfer of Art from one generation to the next. By Insuring the Art at Current Market Value also insures the inheritor; they will receive an inheritance, especially when there is a Fire, Theft, Breakage, etc. prior to the transfer of the asset. This may not be the asset the heirs expect like Art, jewelry, collectables, but I would think, they would be Just as happy with the Money! As Estate/Trust attorneys review the assets of their clients, the most undervalue are those purchased 20 or 30 years ago. I am seeing a trend in the Collections Insurance, Items which cost $10-20,000 back then, now worth 100x more, great investment, great bequeath, important to protect. The cost of Art and Collectable insurance is very inexpensive; I seen $2,000,000 collections policies run less than a weekend getaway to Cape Cod. There are endorsements which can be included in your Art insurance policy, that provide some sort of inflation guard. Usually 1.25% to 1.50% There are Blanket type policies which I use, that do not require current appraisals. The insured would estimate the Market value of the inventory, usually by class and we would set up a total loss value. At the time of loss, Insured would prove the value of the object by updating all bill of sales, appraisals or use a forensic appraisal approach, both works well to settle the claim. This is a good approach; if the collection is lightly documented or the current owner does not wish to disclose the items for estate planning reasons or has so many items, it would be cost prohibitive having them all appraised. visit Artinsurancenow.com

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