Lessons From the Case Of the Invisible Picasso

, By Michael Mendelsohn, president and founder, Briddge Strategies for Art, Heirs & Philanthropy, New

By Michael Mendelsohn, president and founder, Briddge Strategies for Art, Heirs & Philanthropy, New

Many art collectors try to avoid paying sales tax, capital gains and, ultimately, estate taxes. They craftily build collections below the radar by paying cash, using money orders, and shipping art to states that don't collect sales tax. Many also never insure their works and, if they do insure them, pay cash or use money orders to avoid leaving paper trails.

But complications inevitably arise when artwork is transferred to the next generation using the “empty hook” method of estate planning. The idea behind this gambit is simple: When a collector passes away, art works are whisked out of the collector's home by the heirs. In many instances, collectors place tags with their children's names on various pieces so that the kids know who should take what. Possibly, the children think: “No one knew dad and mom owned it!” So they leave behind the “empty hook,” and move the painting or sculpture into their homes, never giving it a second thought.

Sign in to
view the full article

Not a subscriber?

Subscribe & Save
Get immediate access to Trust & Estates online
Subscriber Benefits
Learn more about Trust & Estates magazine, online article access and our free enewsletters.

New on the Web

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts (Updated August 2010)

America's Top 100 Independent B/D Advisors

Seminar: Estate Planning for NYC Residential Building Owners - Register Now by clicking here
Program Co-Sponsored by Trusts & Estates Magazine, the Rent Stabilization Association (RSA), and New York County Lawyers Association (NYCLA) Trusts & Estates Section

Panelists will include attorneys specializing in real estate and estate planning.
Moderators: Robin A. Bernstein, Esq., RSA Deputy Counsel; Susan Lipp, Esq., Editor-in-Chief, Trusts & Estates Magazine; Sylvia E. DiPietro, Esq., Chair, NYCLA Estates Trusts & Estates Section

Wealth Watch E-Letter Subscribe

Fate of Famed Art Collection Unresolved

By David Thayne Leibell, partner in the Stamford, Conn. and New York City offices of Wiggin and Dana LLP

Tennessee Chancery Court temporarily blocks the sale by financially strapped college of a 50 percent interest to a Walmart heiress’ new museum...

The Shifting Sands of the Tax Burden

By John T. Brooks, partner, and Samantha E. Weissbluth, senior counsel, Foley & Lardner LLP, Chicago

A U.S. Court of Appeals ruling underscores the importance of paying attention to the tax implications of selling or transferring property before a testator’s death...

View Past Wealth Watch E-letters...