Often times when people are divorcing or parceling out belongings of a parent, they do not realize the difficulty their emotions bring to the personal property that must be divided. Some of the biggest disagreements can occur over things. The time it takes to decide who gets what painting or what furniture item is much longer and more sensitive, than the time it takes to divide real estate, cars, bank accounts and other assets. Arguments can be avoided and attorney’s fees reduced if people get a Fair Market Value appraisal report for the valuation of the items to be divided.
The following are situations when an appraiser needs to be hired to assist with equitable distribution ::
for D I V O R C E
1) Create a list of all the fine and decorative art bought before the marriage, during the marriage, after date of separation and for what price.
2) An attorney needs to hire an appraiser sooner than later. A couple may agree on one appraiser, or each may hire their own. Most often, opinions about a work of fine or decorative art will change once the appraisal report comes in and value is assessed. The painting the one spouse always hated can now not part with it because the value has tripled since time of purchase. An appraisal report will greatly aid the attorney in dividing works equally by value, and can weight these items against other assets such as real estate, cars, and cash. Hire an appraiser sooner than later because too much time can be spent on speculation of value. Do not wait for a judge to decide as the court will order everything be sold.
3) An artist or designer usually assumes that the work s/he creates is his/hers. The courts, however, view any anything created during a marriage as marital property. The non-creator spouse has an equal claim.
for E S T A T E P L A N N I N G
1) When someone passes, before any tangible property changes hands or sold, the estate must go through probate court. This can drag on and on and on. If a parent dies, you cannot march into a house and remove a painting off the wall or stuff a large sterling silver tea and coffee service in the trunk of your car and drive home. Any item of value cannot be removed from the home or storage facility before a formal distribution of assets.
2) Fine and decorative art valued under $14,000 can be gifted each year
Plan ahead. An appraisal report for Estate Planning can save a tremendous amount of time, minimize family squabble and save money.
for D O N A T I O N
Collectors can sell or gift art to help cover or minimize anticipated estate taxes. An estate planning attorney will help. For example, art can be placed in a tax-exempt charitable remainder unitrust (CRT). The owner can receive distributions if a work is sold. This allows the collector to avoid capital-gains tax. The CRT is not taxed on any gain realized upon the sale of art work that has appreciated or when donated. When the collector dies, the remaining distributions go to a designated charity.
be F O R E W A R N E D
Collectors can have strong attachment to certain works, and assume their heirs will feel the same. Get the collector’s wishes for bequeathing, disposal or donation in writing. If a collector wants a work donated to a particular museum, make sure the museum wants the donation. Make sure heirs will not sell the work instead.
When a donation is valued at more than $5,000, the donor must obtain a qualified appraisal by a qualified appraiser. See IRS Guidance Regarding Appraisal Requirements
Works and items gifted to individuals valued at more than $14,000 must be reported to the IRS, and an appraisal may be required. Check with your attorney.