The Connecticut Law Tribune recently posted a Q&A with an art and insurance attorney. It is interesting because it also looks at obtaining clients as well as giving advice.
Five questions were asked:
- Tell us why an art collector would call you and what you can offer them?
- Tell us why art law is relevant today and how it has changed since you began in the field 15 years ago.
- What is the most common question or concern related to insurance?
- With your experience in art law, what is your best piece of advice for someone who's about to purchase or inherit a valuable collection?
- what is your best piece of advice for someone who's about to purchase or inherit a valuable collection?
The Connecticut Law Tribune reports
Source: Connecticut Law TribuneWhile amassing big art collections worth millions of dollars is nothing new among the wealthy, the tax implications and how to take advantage of them is often where an attorney is needed.
Attorney Von Sanborn, who has 15 years of experience handling art and insurance law, said the growing field goes beyond paintings and sculptures. It also includes fine jewelry, collectible cars and wines.
The 49-year-old New Hampshire native—who is an attorney in New York and Connecticut—counsels on the formation of art trusts; issues related to sales and use of tax disclosures; and art transactions.
Sanborn joined Day Pitney in Hartford as a partner in February, after working for years as an attorney at Withers Bergman.
A modest art collector himself, Sanborn said his collection "has no one you would have heard of." Sanborn said he understands the emotions that come with collecting art, adding, "Art law involves some of the most emotional and aesthetically interesting assets."
Sanborn recently discussed the aspects of his job representing art collectors.
Q: You've worked with many wealthy art collectors. Tell us why an art collector would call you and what you can offer them?
A: I help clients create and implement ways to mitigate the adverse impact of estate and gift tax as well as income tax on capital gains associated with sales of collectibles such as art. I also help minimize the burden of state-level sales and use tax.
Further, I assist clients to properly document purchases and sales of art, which is increasingly important due to the significant growth of the global art market.
Finally, for those clients who do not believe they are collectors, I help them understand that "art" includes not just fine art but cars, watches, jewelry, wine and other collectibles.
Q: Tell us why art law is relevant today and how it has changed since you began in the field 15 years ago.
A: While the global art market is opaque, estimates on annual art transactions range from $50-$60 billion, if not higher. It's clear that art is now an asset class of its own, necessitating all the due diligence once reserved for more traditional asset classes like financial investments and real estate.
Whether my clients are buying, selling, gifting, donating, loaning, borrowing against or otherwise transacting in art, given the enormous value of such assets, I work to ensure my clients are properly protected with the appropriate legal documentation.
Additionally, as inheritance tax and international tax laws continue to change, I firmly believe clients must be properly advised in order to avoid costly mistakes.
Q: You've had extensive experience assisting clients with a variety of complex art insurance issues. What is the most common question or concern related to insurance?
A: Clients most commonly ask why they should insure their art, given concerns that the Internal Revenue Service will use those insurance values when it comes time to settle an estate. Given that some of our clients' collections run well into the hundreds of millions of dollars in value, this concern is understandable.
That being said, the IRS recognizes the difference between insurance values (high retail replacement values) and the lower fair market values used for issues related to probate, estate and gift tax, donations, and therefore the IRS does not consider retail replacement values when calculating the value of clients' art collections.
Moreover, insurance is one of the only ways to mitigate risk and protect art assets, so it is an important hedge for high-net-worth clients that have significant art collections.
Q: With your experience in art law, what is your best piece of advice for someone who's about to purchase or inherit a valuable collection?
A: Make sure the collection has been appraised by an independent specialist in that particular area of the art market, avoiding any appraiser that has a conflicting interest in buying or selling those assets. Given that appraisals are the only way to ensure that reasonable decisions can be made on what to keep, sell, or donate, it is critically important to find and engage the right team to appraise one's collection.
Q: You're also an international tax attorney. Are there any new tax laws clients should be aware of, and how do tax laws change depending on who is in the White House?
A: At this point, it's clear President Donald Trump intends to undertake meaningful domestic and international tax reform. However, it is unclear how he intends to achieve such reform. At the end of the day, I strongly believe that both individual and corporate tax rates will be lower, it just remains to be seen as to how Trump will achieve this.
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