Regularly, I meet with family office advisors and their clients to discuss the disposition of their collections. Most recently, I met with a client, wealth advisor and attorney to discuss a valuable collection of art, silver, manuscripts and furniture.
The patriarch requested that several paintings stay in the family and be dispersed between the four siblings. However, these multi-million dollar paintings currently lack the appropriate risk management.
IMPORTANT QUESTIONS TO ASK ABOUT TANGIBLE ASSETS
How much should they be insured for? Who should pack and ship these paintings to the multiple family members located in cities across the United States and in London?
The patriarch would also like to donate a significant manuscript to an historical society. Is the historical society interested in acquiring the object? Does the institution want to incur the cost of insuring and preserving a document of significant historical and financial value?
Finally, the client would like to sell a substantial collection of silver, period furniture, historical documents and several multi-million dollar paintings. Is this the appropriate time to sell all of these items? Should the client sell with one auction house? With multiple houses? In a private sale?
Clients face many issues related to managing a varied collection and the disposition of these valuable objects. However, high-net-worth individuals rarely apply the same rigor to these items as they do when making financial investments or business decisions. I educate clients and their advisors on the importance of developing and implementing a strategic tangible asset management plan that will allow for a detailed understanding of what assets are currently held, their value, future value, and costs associated with maintaining or disposing of them
VALUATION IS THE FOUNDATION
The valuation is the foundation for almost every decision made with tangible assets. Examining the current value of art, jewelry, wine, furniture and other collectibles, along with their future costs, allows clients to make better decisions regarding the appropriate disposition of these objects. Some clients may have items partially documented on their insurance policy but never review the values, which can change substantially over time. In recent recessionary times, many values can be much lower than previously listed, permitting cost savings by appropriately adjusting values. If inflation increases significantly in the future, current insurance values could prove woefully inadequate.
Too many families wait to develop a strategy for their valuables until it is too late to make a rational decision about an effective plan. The market may have shifted or legislative changes enacted which can impact the net monetary gain via a sale or donation of an asset. It is never too early to begin planning and discussing the various ideas with your key advisors. Correct documentation enables proper planning and ensures that the appropriate tax basis is reflected, which can save family members thousands of dollars.
OUR SERVICES
From detailed provenance research to uncover the history behind a collection, to the robust inventory management, security consultation and conservation planning to protect its future, our specialist teams treat every collection as if it were their own.
DELAWARE MAY BE A LITTLE STATE, BUT IT HAS BIG PACKAGES
Delaware offers a Complete Package of Incorporation Services:
Modern and Flexible Corporate Laws, a Highly-Respected Court of Chancery, and a Business-Friendly State Government.
DELAWARE ADVANTAGE
I am constantly asked, “Why Delaware?”, what is the “Delaware Advantage” and how does it apply to fine arts? Fine arts can create challenging tax issues, but with proper planning, artists, collectors, investors and dealers can minimize income, sales and estate tax consequences.
Delaware has long been known as the jurisdiction to settle trusts. Specifically, the Delaware “advantage” comes from its longstanding favorable laws, consistent rulings by the Court of Chancery and a legislature and bar that work closely to keep Delaware in the forefront of trust construction and administration. Such advantages include providing for asset protection, confidentiality, non-judicial settlements, creation of perpetual trusts, non-judicial accounting, creation of total return trusts and state tax exclusions for accumulation of income for non-Delaware beneficiaries of certain trusts, just to name a few.
Although not for everyone, fine arts can be a valuable asset class making up a balanced portfolio within a Delaware trust. In many cases, corporate trustees will not take possession of tangible assets such as fine arts or real estate, but this can be resolved by having the trust form an LLC to hold the asset, thereby allowing the custodian to take possession of the interest in the LLC. There are ample storage facilities in Delaware that cater to fine art collections and the cost of storage in Delaware can be less than that in other parts of the country. There can also be a significant sales tax savings on the purchase and sale of fine arts since Delaware does not have a sales or use tax. Furthermore, in the case where the trust beneficiary is not a Delaware resident, an income tax savings may be achieved in some cases where the LLC interest (which holds the fine art) is sold and the profit is not distributed to the beneficiary. This could be a significant savings if the beneficiary lives in a high income tax state such as California or Illinois.
Careful planning and the advice of a Delaware CPA, tax attorney and corporate trustee should be sought before implementing any of the above strategies.
The author, Jordon Rosen is a CPA and the head of the Estate & Trust Section at the Wilmington, Delaware CPA firm of Belfint, Lyons & Shuman and can be reached for questions at jrosen@belfint.com or at 302.573.3911.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
ACQUIRING EMERGING ARTISTS
Last year there was talk that the bubble for Emerging and Contemporary Art market was about to burst, if it hadn’t already. Our favorite sensationalized headlines included That $100,000 Painting Bought to Flip Is Now Worth About $20,000 and Collectors Abandon Emerging Art. But we continue to work with clients who have established collections ripe with emerging art that continues to demonstrate that the market is still thriving. And the success of emerging art exhibitions and sections at some of the most influential international art fairs also paints a different picture.
“I made a blanket in 1996 and it sold for £3,500 in 1997. Recently it sold for £720,000 at Christie’s. There is nothing in the world that can give you a return like that.“
– Tracey Emin
OUR BEST TRIED-AND-TRUE ADVICE FOR COLLECTORS
With Emerging Artists on our mind, here is a summary of our best tried-and-true advice for collectors—taken from conversations our team of advisors have all had, and are preparing to have, while assisting clients with acquisitions at The Armory Show.
- Define and refine your tastes. The first thing we do with a collector, fresh or seasoned to the market, is establish a clear picture of tastes and interests. Many new collectors are often surprised at what ultimately pulls their attention and draws their emotions.
- Establish a budget. Begin acquiring the best with what you have and don’t rule out the large fairs like The Armory Show or Art Basel Miami Beach. Even these fairs have great offerings at entry-level price points. Some of the most discerning collectors focus solely on prints, multiples and works on paper. And when it comes to prints, there are some dynamic trends and techniques emerging artist are exploring to push the medium to new heights.
- Do your due diligence. Here is a little case study: While at Art Miami in December, two galleries each had works by the same artist. They were comparable pieces of art, similar in size, composition, color and condition. One gallery listed their piece at $250,000; the neighboring gallery had theirs listed at $175,000. It always pays to do a little research before you purchase. As we said earlier this month, no one buys a new car or house without first delving into the market, comparing reports, consulting experts and doing their homework. However collectors will drop large sums on a work of art without seeking a second opinion. Connect with fellow collectors, the artist, other dealers who represent the artist, and as it should go without saying—call your art advisor!
- Understand how the markets work. When you acquire a work of art from a gallery or dealer, you are paying a retail price. When you are ready to sell the artwork, let’s say the market remained stable for that particular artist. Even if able to return to the original dealer you acquired it from, you will likely not get what you paid for it, because the dealer now needs to invest his time in reselling the piece, time and resources not at your disposal, and that comes at a cost. Which leads us to our next point.
- Buy what you love. “I deduct 10% annually for adding to my life enjoyment, everything else is a gain or loss on investment” are words to live by from a private collector who spent three decades building a collection of artwork he loved. What’s most memorable about this client isn’t his collection, but his attitude. And while not everything had a return on investment, it was his appreciation of the collection that put everything into perspective.
- Stay connected and get involved. Collecting art is a lifestyle and process, so follow the careers of the artists you add to your collection, go to museum exhibitions, check out gallery openings, meet collectors and artists at clubs related to your collecting interests, and be open to discovering a passion for something you hadn’t discovered before.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
Highlights from this year’s Basel Miami fair include works with social commentary that addressed political issues such as Sam Durant’s large red painting “End White Supremacy” that was featured at Blum and Poe, Los Angeles, which greeted attendees upon arrival at the fair. Numerous artists used the opportunity to voice opinions about immigration, worker’s rights, women’s rights, and Black Lives Matter. Jack Shainman Gallery in New York represent numerous artist whose work address issues of color such as Carrie Mae Weems, Kerry James Marshall, Nina Chanel Abney, and Radcliffe Bailey. Kehinde Wiley’s Equestrian Portrait of Isabella of Bourbon, 2016, featured an oversized portrait of a contemporary African American woman seated royally on horseback.
Not all works were as politically motivated and controversial as the above-mentioned pieces. The overall consensus regarding what collectors were buying and why was that there was a conservative and thoughtful approach to purchases. Many collectors are more concerned with investment value for the art they purchase and look to advisors and evidence of proven tract records within the primary and secondary markets. Many galleries included new-to-Basel artists as a way of diversifying the traditional parade of named artists that usually litter the floors and walls of the enormous convention center.
British Galleries were selling well with the changes in currency exchange since Brexit. The British owned galleries we visited were anxious to assist clients with information and negotiated prices. European and Asian Galleries offered a variety of smaller pieces by well-known artists. A South African Gallery exhibited works with political overtones.
Some of the more popular artist of this year’s fair was Yayoi Kusama, with dotted paintings at several galleries, many with the asking price at $1M or below. Gagosian Gallery proudly displayed Jeff Koons enormous Blue Diamond sculpture, one of ten or so similar works with different colored stones, all being offered at $3M-$4M. George Condo’s market is rallying in 2016 and several galleries offered his paintings with prices ranging from $150,000 for small works to $1M for his oversized paintings. Jean Dubuffet was the sweetheart of many galleries that offered older works prior to 1950s to his latter more colorful works from 1970s being offered for $2M at Landau Gallery.
Some of the artworks that were limited or missing from Basel this year include Jean Michel Basquiat paintings that were very few and far between with an asking price of $3M-$4M for mid-size wall pieces. Not many of Warhols graced the walls of numerous galleries as in earlier years at this this fair. Smaller Richter’s were available, but the large masterful pieces were tied up at auction instead. Also missing from Basel Miami were Damien Hirst paintings, which appeared in large quantity at Art Miami this year instead. Also in minimal supply were digital, video artworks and new technology pieces.
This year’s takeaway from Basel Miami is that savvy collectors are using advisors and researching artist and markets before jumping into purchases above $250,000. Buyers were much more discerning when it came to what they wanted to purchase. Prices for blue-chip works are higher than ever, but galleries were willing to negotiate on many of the artworks. It doesn’t seem to be a good time to roll out new young unproven talent for dealers unless willing to price the pieces conservatively. Suffice to say, Art Basel Miami is a good barometer of the state of the world as seen in the works presented by artists and the works that were sold to collectors. Despite the rallying of the stock market, collectors were not as confident as the market has experienced in past years.
By Ruth Crnkovich, Senior Advisor, Pall Mall Art Advisors
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
2017 Agenda: Personal Use of Business Autos, Millennials at Work + More
What’s on the agenda for the Personal Lines Practice Group in 2017?
Suggestions ranged from personal use of business autos to hiring, handling and keeping millennials at this month’s teleconference, chaired by George Pester of Johnson Kendall Johnson.
THESE WERE AMONG THE TOPICS
- Training new producers
- Social media campaigns that keep the agency’s name in front of clients and prospects
- Social media’s role in client retention
- How your agency can increase visibility through volunteer days, networking groups and other efforts
- Improvements in the claims process
- Risk management techniques that lower risks
- Technology and risks, such as helping clients in geographic areas where alarm systems are required
- Segmenting clients and the use of service center
- How to hire, handle and keep millennials
- Time management
- Client retention strategies
- Motivating service teams to offer additional products to clients
- Community events that draw business to the agency
- Personal use of business vehicles and insurance pitfalls
- Encouraging referrals from commercial lines
- Structuring service teams
The next teleconference will be Dec. 14 with Colleen Boyle, senior vice president-national sales director of The Fine Art Group, as a guest speaker. Her topic will “Completing the Picture of Wealth: Managing Tangible Assets.”
PROTECTING YOUR CLOSETS
Following Hurricane Sandy clean up, The Fine Art Group recognized that all too often closets were an overlooked entity of the risk management portfolio. Entire collections of custom suits, evening gowns, handmade leather handbags and luxury apparel, often highly prized by our clients, were left in ruins with few avenues to rectify the situation.
As a direct result of our clients’ increased demands to appraise their wearable collections, we have developed the Wearable Collection Inventory and Valuation Service. As with our other appraisal services, the The Fine Art Group team will document and photograph the collection on-site. The wearable assets will be appropriately catalogued, photographed, researched and valued, and clients will be presented with a detailed appraisal report containing the retail replacement values for each item.
As part of the report, The Fine Art Group will also provide market data on couture items that are rapidly appreciating –– arming clients with the necessary information to better bolster their risk management portfolio as well as provide necessary metrics for monetization strategies in wealth management.
FURTHER INFORMATION
DUE DILIGENCE IN BUILDING OUR COLLECTION OF CONTEMPORARY ART
With prices high and artist’s incorporating a vast array of media, collectors must be hyper-vigilant when selecting works of contemporary art. Not sure what to look for? Here is a quick overview that every collector should consider before committing to a purchase.
- Investigate the value: With respect to valuation, do not rely on the seller’s representations. Instead, research the value of the work yourself, and consult with an independent professional such as an appraiser or art advisor familiar with the artist’s market.
- Evaluate the condition: Always physically inspect the work in person (and for significant purchases, obtain a condition report) to ensure the work is not damaged and free of obvious condition issues.
- Consider the materials used: For works with non-traditional or ephemeral materials, investigate the risk that the work will deteriorate, and learn the best methods to preserve the work. No one wants to purchase an expensive work of art that is not made to withhold the test of time.
- Research the history of the work: For previously-owned works, conduct some background research to verify the authenticity of the work and the provenance information provided by the seller. The Art Loss Register and Art Claim are great resources to find out whether the work has been reported as stolen, looted or missing, and searching state Uniform Commercial Code databases will confirm that the work is not subject to a third-party’s security interest.
- Seek advice: The Fine Art Group is equipped with the necessary expertise to guide you in building your collection. We work with collectors every step of the way, from defining tastes and negotiating list prices, to delivery, storage and conservation.
*With information provided by Amelia K. Brankov, Attorney, Frankfurt KurnitKlein + Selz PC
OUR SERVICES
Understanding value is the cornerstone to effectively managing a collection – and at The Fine Art Group, it is this understanding that enables us to work as trusted fiduciaries for our clients, and their objects. We are experienced providing appraisals for a wide range of purposes, and are also specialists in unique and complicated appraisal scenarios.
The exhibition brings together a selection of artworks realized between 1959 to 1994 by Edward Kienholz and Nancy Reddin Kienholz, including the well-known installation ‘Five Car Stud’ that gives the show its title.
A life-sized reproduction of a scene of racial violence, Five Car Stud is considered one of the American artist’s most significant works. Despite the controversy and attention that it earned from critics right from its debut, the piece remained hidden from view in the storage of a Japanese collector for almost forty years.
‘Five Car Stud” is now part of the Prada Collection, and is being shown for the first time ever in Italy, where it forms the central nucleus of an exhibition path that runs from the Sud gallery to the Deposito, and extends into an external space, presenting 25 artworks including sculpture, assemblages and tableaux realized by the Kienholzes from 1959 to 1994, as well as documentation material on the history and making of Five Car Stud.
The exhibition offers what Peter Aspden in the Financial Times, calls “ withering critiques of US society”. It includes representations of violent situations that the Foundation warns may disturb or offend some visitors. The Foundation advises minors to avoid visiting the exhibition, and in any case may do so only when accompanied by an adult who assumes full responsibility for the visit.
For further information about the exhibition click here
For a review of the exhibition by Peter Aspden in the Financial Times click here
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
The fifteenth International Architecture Exhibition is being held in the Giardini and the Arsenale venues as well as in various other venues in Venice. The Exhibition includes 88 Participants from 37 different countries, as well as 62 National Participations and a selected choice of Collateral Events.
Alejandro Aravena, the Exhibition’s curator, describes the aims of the Exhibition as follows: “We believe that the advancement of architecture is not a goal in itself but a way to improve people’s quality of life. Given life ranges from very basic physical needs to the most intangible dimensions of the human condition, consequently, improving the quality of the built environment is an endeavour that has to tackle many fronts: from guaranteeing very concrete, down-to-earth living standards to interpreting and fulfilling human desires, from respecting the single individual to taking care of the common good, from efficiently hosting daily activities to expanding the frontiers of civilization.
Our curatorial proposal is twofold: on the one hand we would like to widen the range of issues to which architecture is expected to respond, adding explicitly to the cultural and artistic dimensions that already belong to our scope, those that are on the social, political, economical and environmental end of the spectrum. On the other hand, we would like to highlight the fact that architecture is called to respond to more than one dimension at the time, integrating a variety of fields instead of choosing one or another.”
The Meetings on Architecture are a programme of events on the themes and case studies presented at the Biennale. The talks will take place throughout the whole period of the Biennale Architettura 2016, involving the architects and participants invited.
For more information click here.
For a review of the Exhibition by Edwin Heathcote in the Financial Times click here.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
Clients attending Art Basel are invited to explore one of the season’s most prestigious art events in VIP style.
As a globally respected art advisory firm, our collective expertise ensures the very best independent advice is at our clients’ disposal. This year, we are pleased to bring that white-glove expertise to your art fair experience at Art Basel Miami Beach.
We advise arriving at least one hour early to allow ample time to find parking, collect or purchase your ticket, leave items with coat check and go through security.
VIP EVENTS & TIMES
First Choice (by invitation only): Wed, Nov 30, 2016 11am
Preview (by invitation only): Wed, Nov 30, 2016 3pm-8pm
Vernissage (by invitation only): Thu, Dec 1, 2016 11am-3pm
Public days
Thu, Dec 1, 2016, 3pm to 8pm
Fri & Sat, December 2 & 3, 2016 12 noon to 8pm
Sun, December 4, 2016 12 noon to 6pm
TICKET INFORMATION
- Tickets for Art Basel are available online at artbasel.com/miami-beach/buy-tickets
- Each client must purchase their ticket prior to meeting with an Art Advisor
CONCURRENT ART FAIRS
During Art Basel, there are a variety of concurrent art fairs that cater to different collecting interests and various price points. Pall Mall Art Advisors is happy to offer consultations at the fairs listed below. For more details, please contact Stephanie McNeil or Shane Hall.
ADDITIONAL SERVICES
Throughout the duration of Art Basel, our team of Art Advisors will be available to provide additional information on works of art you may be interested in acquiring.
Details may include insight into market trends, tips on collecting, metrics behind a selected work of art, valuable insight into the artist’s market, gallery negotiation and assistance with acquisition.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.
Tate Modern presents the largest retrospective of modernist painter Georgia O’Keeffe (1887-1986) ever to be shown outside of America. Marking a century since O’Keeffe’s debut in New York in 1916, it is the first UK exhibition of her work for over twenty years. This ambitious and wide-ranging survey reassesses the artist’s place in the canon of twentieth-century art and reveals her profound importance. With no works by O’Keeffe in UK public collections, the exhibition is a once-in-a-generation opportunity for European audiences to view her oeuvre in such depth.
Widely recognized as a founding figure of American modernism, O’Keeffe gained a central position in leading art circles between the 1910s and the 1970s. She was also claimed as an important pioneer by feminist artists of the 1970s. Spanning the six decades in which O’Keeffe was at her most productive and featuring over 100 major works, the exhibition charts the progression of her practice from her early abstract experiments to her late works, aiming to dispel the clichés that persist about the artist and her painting.
The exhibition is accompanied by a catalogue from Tate Publishing and a program of talks and events in the gallery information about which is available on the website.
Tickets can be booked up to 8 hours in advance online or up to 24 hours in advance by telephone on +44 (0)20 7887 8888.
For more information click here.
OUR SERVICES
Offering expert Advisory across sectors, our dedicated Advisory and Sales Agency teams combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.