For New York residents who are taking steps to prepare for the future with an estate plan, having collectibles and striving to keep them in the family without burdening loved ones with onerous tax implications is one of the main considerations. Understanding the estate tax and how it can lead to complicated estate planning is imperative when organizing the documents. Having comprehensive strategies to shield loved ones is an integral part of a sound plan. One issue that is currently at the forefront is the president’s proposed tax changes and how they might affect people who have valuable art collections.
President Donald Trump is working to implement his changes to the tax code. Part of that is having the federal estate tax repealed. The estate tax currently affects those who are inheriting estates worth millions. The ideas are being promoted as a benefit for family-run businesses but, if implemented, it will be a boon to those with high-priced art. Under the current circumstances, people who are married and inherit $11 million are exempt from the estate tax. Anything beyond that is subject to taxation. The amount that an estate is worth can be increased exponentially if there is valuable art. This is something that collectors and their heirs are thinking about as the changes are being proposed.
People with these expensive pieces can try to sell or donate the art. They can also put it in a trust. If they fail to take these steps, the items might have to be sold to pay the taxes. If there is a repeal of the estate tax, such steps would not be needed. For those crafting an estate plan with art as a centerpiece of the assets, this is not a small issue. Taking certain strategies to protect the art or shield heirs from tax burdens would be affected by a repeal.
With estate planning, a priceless art collection is not an issue for many people, but it is for some. This can be applicable not just to art collections, but to other collectibles that could leave heirs and beneficiaries with a massive tax bill. Understanding possible changes to the law is imperative whether a person is creating an estate plan or has already done so and would like to alter it accordingly. Having legal help is vital and a lawyer should be consulted about these and other estate planning matters.
Source: cbsnews.com, “Trump tax overhaul plan would benefit wealthy art collectors,” Oct. 16, 2017