In January 2015 an oil sketch of John Constable’s most famous painting sold at Sotheby’s for $5.2 million having been purchased at Christies for $5,200 in 2013. What are the lessons for clients and advisors alike from this? http://www.cnn.com/2015/02/01/us/john-constable-painting/
- Lesson one: Your plans should adapt to inherently uncertain valuation of artwork. The painting in this case was exactly the same when it sold for $5,200 and when it sold for $5.2 million (save for come dirt and over painting). The difference is that the buyers and sellers saw the artwork differently once the description changed. This is important when considering your estate planning. If artwork you bought cost $5,200, your plan should be able to cope with the fact that the artwork is valued at 1,000 times your purchase price in two years.
- Lesson two: Record and preserve your information, especially if you do not intend to sell your artwork during your lifetime. The Constable was stored in a closet for 60 years and when it surfaced there was no record of what it was, who had bought it, and from whom. Any one of those things would have shed light on the true nature of the artwork. You are the expert in your collection, and you need to preserve that expertise beyond your lifetime.
- Lesson three: Spending money now will preserve what you have and what you know. You may be reluctant to spend the money needed to preserve your knowledge, to have your artwork cleaned and authenticated, and to have someone be ready to act when the unexpected happens as it seems that there is no immediate benefit from doing so.