Professional Advice for Those Fortunate to Inherit an Art Collection
By Bonnie Kagan of Kagan Fine Art, art advisor and appraiser in New York
You have inherited an art collection. Wonderful
You may ask:
Ok, what do I really want to do with all of this?
What are my options? How does one prepare for the secondary market?
How do you choose an art professional to help?
It is best to choose an Art Advisor and Appraiser, since this person will be able to take you through all the steps to achieve the outcome you want, they will know where to go, what you need, and what it all should cost. Besides having the obvious qualifications as an art professional, choose someone who will take the time to listen to your concerns and situation.
If the art collection has some real objects of art, you will either need to divide them equitably in some way, sell them off, or donate them to charity for a tax deduction, or, a combination of these.
To keep everyone happy, the art objects should be redistributed in the optimal way, so it is best to retain an art professional to help assess the situation and recommend the best course of action, not just for all the art in the estate, but each individual piece.
The art will need to be appraised by a real appraiser, not someone who gives an auction estimate, or an insurance company who will simply be able to tell you what it the retail replacement value would be. To ascertain worth, you will need real market values; that means Fair Market Value.
But, no need to worry, the umbrella of services required can be supplied by an Art Advisor, who may also be an appraiser, dealer, or some other art professional.
Getting ready for the market
The inherited art will first need to be appraised, and in so doing a report on it should refer to the art’s condition and provenance (history of ownership), allude to its authenticity, and state the authorship, as well as outline some proof of ownership. These issues are relevant and will need to be addressed so that values can be assigned and the art taken into the secondary market.
Choosing an appraiser is the an important consideration in the valuation process because this person must be familiar with the relevant and current market and the type of art being appraised, as well as having the now proper standards of appraisal methodology, being the basic qualifications of the "Uniform Standards of Professional Appraisal Practice" (USPAP).
Appraisers should also be affiliated with an appraisal society that has a code of ethics, such as the American Society of Appraisers or the Appraisers Association of America. Knowing the Fair Market Values will help you to make decision on how to proceed.
A "Certified" appraisal is a legal document and must include, among other things, the appraiser's qualifications, and a signed certification page.
The appraiser's fee must not be contingent on a value conclusion, nor should the appraiser have any involvement in the sale of this art, since this is considered an unacceptable conflict of interest. If your Art Advisor can broker a sale, then a colleague, working independently, would be needed to do the appraisals.
The following issues will need to be addressed: authorship, authenticity, proof of ownership, provenance, condition.
Many artists do not sign their work, but authorship can still be proven with professional research. There may be a "Catalogue Raisonne", or complete listing of the most important works, or, art clearly attributed to the artist, or sometimes a comprehensive compilation of all the work by an artist. The Art Advisor can report on same.
The best way to prove authenticity is to go to the artist. If the artist is deceased, dealers who have had a long association with the work may be acceptable authenticators. There are designated authenticity experts for most well-known European and American deceased artists who can supply a "Certificate" of authenticity. These Certificates can cost from $1,000.00 to $2,000.00 USD. Your art appraiser or advisor should research any Catalogue Rainsonee (complete list of an artist’s body of work) and this step may be able to establish authenticity and eliminate the need to go through the authenticator directly.
Proof of Ownership: Title
Clear title is necessary before any money changes hands, (especially since the discoveries of enormous amounts of stolen and looted art appearing in respected museums). A bill of sale is a good indication of title. Other things maybe helpful, or support title, such as photos or catalogues with the art shown, mentioned in a well, r shipping documents, or restoration reports.
The history of ownership needs to be established as best as possible. Likely the art was purchased at a gallery, and stayed in the family for decades. If this is not the case, gaps in provenance may raise questions about clear title. owner have registered) The status of the present previous and present owners will have an influence on the art's value. Famous owners can mean higher value.
Naturally condition influences the value of the art. Even if your old Picasso has a few small nicks and layers of grime, all is not lost. Competent art restorers should be able to fix these. Old items usually have age and damage issues, often from the environment. An incompetent restoration could make things worse. Be careful whom you trust to restore.
Condition problems may not destroy the value, so it is often advisable to allow the next owner to choose their own restorer, and then the estate will not have to deal with this issue. The art can be appraised in a pre-restored condition.
Which value is most valuable?
Appraising for estate purposes is a little different than for insurance. Value in dollar amounts is contextual; this depends on the place (city, or country) or the venue, and the method of the sale. You may want to know: “What is the one and only value?” In fact there are different value amounts for the same item. Your appraiser can offer advice on the Relevant, or best, Market.
Insurance valuation is the highest, since it amounts to Retail Replacement Value. The next is the Fair Market Value, which is used to value the estate and for charitable donation for tax credits, and the next is the liquidation, or Marketable Cash value.
Should you decide to sell the art, you can do so in the secondary dealer market or by auction. It may be advisable to consider each item separately and distribute to the most appropriate dealers. It is likely that the art was acquired from more than one source, so makes sense to redistribute it that way too.
Some art will do better at auction, and some artists' work never sells in this arena. Dumping the entire estate collection into auctions may not be the best move, but a good choice for some of it. The downside of an auction is that you cannot control the actual sale price (although it could be surprisingly high), or it may not sell at all. When this happens, the art could then bear the tag of being less desirable than originally thought, and it may need to be discounted. Also, be aware of the commission auction houses take as it could be 20 or 25 percent, plus five percent for insurance. These added to other administrative costs could mean you may realize only about 70 percent of the auction sale price. It may be a good idea to check with a private dealer appropriate for each item first.
Your art advisor should be able to place each item into the best possible solution for the objectives, get the property ready for the market and supervise all aspects of selling.
If any items are problematic, if the authenticity is questioned, or the prognosis of the restoration is in doubt, you may want to put these aside, so as not to hold up the distribution of the rest.
For more information about, or to contact, Bonnie Kagan and Kagan Fine Art, visit her listing on The Clarion List here.