What will happen to your artwork when you pass away? Who will take care of the works you created and collected during your lifetime? Would you like your family to keep your artwork, or donate it to a museum, or sell the works to interested buyers? While every responsible person should have an estate plan to distribute their belongings upon death, an artist or art collector has an added responsibility of making specific provisions for their artwork.
On October 25, Attorney Laura Zeman of Zeman Law Group, PLLC presented a workshop put on by Artist Trust and Washington Lawyers for the Arts where she discussed the legal framework that governs estate planning in Washington State and identified key questions and concerns that every artist should know and consider when preparing their estate plan. The workshop addressed several different topics including Objectives, Fundamentals of Estate Planning, and Typical Estate Planning Documents.
It is important to make specific decisions about transferring your estate pursuant to your needs and goals. The idea is to preserve your legacy and ensure that all the assets you have collected and earned in your lifetime are protected or distributed according to your wishes.
Fundamentals of Estate Planning
There are several different ways to plan for how your estate will be handled once you’re gone. One option is to allow the state to determine where your property goes. Every state has intestacy laws for people who die without a will. If this happens to you, your property will pass according to state statute and you will not get to choose who handles how your estate is wrapped up, or what happens to your minor children, and your property passes to your spouse, children, or nearest blood relative. Without an estate plan, all your assets could go to crazy Uncle Joe with the taxidermy obsession. Bottom line, make a plan, or the state will make the plan for you and it probably won’t be what you wanted.
Community Property vs. Separate Property
When you begin your estate plan, the first determination to make is what property belongs solely to you (separate property) and what property is community property, which is owned by both you and your spouse. Community property is all the property that has been acquired during marriage, this includes any artwork that was created, regardless of who created it. If you are the artist and your spouse has an office job, the money your spouse earns from that job belongs to both of you and the art you create belongs to both of you. Separate property is any property owned prior to the marriage, along with any interest and profits.
Upon death, community property is divided in half between both spouses. Each spouse can choose what happens to his or her half of the property. Again, this includes artwork that was created or acquired during the marriage, regardless of who created or collected the works. For assets owned prior to marriage, each spouse can elect what happens to that property, along with half of the community property. As you begin thinking about how you want your estate to be handled when you die, it is important to clearly determine which assets are subject to the separate and community property rules so you can make an accurate plan for your entire estate.
Probate vs. Non-Probate Property
As you begin to make your list of assets, categorize them according to probate and non-probate property. Probate property is all the assets that will be distributed according to your will, like clothes, furniture, and any artwork. Non-probate property are assets that pass through a beneficiary designation, a trust, or a contract. Examples of non-probate property are life insurance policies or retirement benefits. Be sure to keep your beneficiary designations up to date for all non-probate property. If you put your girlfriend down as the beneficiary of your life insurance policy and then married her sister instead, be sure to change the designation or the jilted sister-in-law will get the money when you die, regardless of what your will says.
Make a list of all the property you own, be as specific as possible, and include all of your artwork, both what you have created and collected. Indicate where all of your artwork is stored. You might have some hanging in a gallery, a piece in a museum, one at the winter cabin in Colorado, and another one in a storage unit. If possible, include photographs. Save this list in a safe but accessible location and give a copy to the executor of your estate.
Estate Planning Documents
The most common estate planning tools include a will, revocable “living” trusts, and beneficiary designations for non-probate assets. A will is a document that outlines how you want your assets distributed upon death, it is witnessed, signed, states a beneficiary, and appoints an executor.
A revocable “living” trust is a will substitute and works just like a will in determining what happens to your property. However, a trust does not have to go through the probate process with the courts and is typically used when there are privacy concerns (probating a will makes it a public record and viewable by others), or in the case of a person who may need someone else to handle their assets, or if the estate involves property located outside of Washington state. If you do own property in other states or countries, don’t make any estate plans with that property until you consult with an attorney in those locations as different estate planning rules will apply.
Artwork is a unique asset because it can change in value over the years. Being a working artist also complicates how your estate is valued. If creating works of art is your livelihood then the works you create are not only treated as assets in determining a value for your estate, but your work as an artist is considered a business so your art creation is also valued based on earning potential. Because you have both physical works of art and your business as an artist, both assets need to be addressed in your estate plan.
Under a will or trust, artwork can be distributed in several different ways. A specific gift of artwork (“Aunt Lilly gets my painting of her feet”) is best for any artwork of value. A will can also reference a separate writing or list that contains all the designations. If you decide to list everything in a separate writing, be sure to date it, sign it, refer to the list in your will, and provide a copy to your attorney and the executor of your estate. As your art collection changes over time, regularly update your asset list so it is as current as possible.
To adequately deal with your art collection, your will should include specific provisions related to what kind of insurance the artwork has or needs, a provision to set aside funds to pay for storage or shipping costs to get the artwork to its intended beneficiary, language that indicates if and how the art should be exhibited, conserved or sold, and can include a request to have a named “cultural advisor” be involved in all artwork related decisions.
Your will is not irrevocable until you die so every designation, beneficiary, asset list, and specific gift can be changed multiple times throughout your life. The important part is to gather all the information into one place and have an estate plan, even if you know it might change as the years pass.
The workshop provided an excellent starting point for artists to begin the estate planning process. But as with any legally significant decision, consult an attorney early and often throughout the journey. Find an estate planning attorney you trust and work with him or her to create a plan that will protect your assets and ensure they are handled according to your wishes when those pearly gates call.
This post represents the views of the author(s) identified above and does not necessarily reflect the views of Artist Trust (AT) or the Washington Lawyers for the Arts (WLA). AT/WLA provides this content as a public resource of general information. AT/WLA does not warrant that the content is or will be complete and accurate. It is not intended by AT/WLA, nor should it be considered by you, to be a source of legal advice. You should not rely upon the information provided. Rather, you should seek legal counsel for consultation and advice.