The regional Pacific Standard Time art exhibition has also produced a record number of gala art museum exhibition openings. This rare opportunity to meet with a large number of museum trustees and officers in one month has highlighted an important issue. That is, there has been no formal communication between the leaders of museum associations and the leaders of the trusts and estates practice group of the California State Bar on a very important subject. That is changes affecting the ways that art owned by estates will be taxed or qualify for charitable donations.
Most museum trustees and managers questioned on this subject have been quick to point out that the financial reporting standards for non-profit museums and government owned museums like LACMA are different than for private businesses or estates. This is true, but failure to follow the rules regarding fair market valuation in the business or estate often results in “clouded title.” That is because it is possible there may be a future tax lien secured by the artwork. This issue is literally beneath the surface; art with clouded title is not displayed in public because insurance companies exclude it from coverage.
In addition, the UCLA Hammer Museum has shared excellent information in its educational programs on these subjects, but many museum and art association leaders admit they simply do not understand it. Fortunately, the most important message from the UCLA Hammer Museum charitable gifts of art education program is not complicated. That is all bequests of art to museums and libraries made in wills require a letter of acceptance from the museum or library dated before the date of the will.
The Presidential candidacy of Texas Governor Rick Perry is focusing additional attention on this subject. Texas has played a leadership role in encouraging best practices for museums and eliminating public funding for museums which do not meet the highest standards. Even if Perry is not nominated, he is expected to have enough delegates at the Republican national convention to influence policy decisions.
There is also good news to report. The Gould School of Law at the University of Southern California has scheduled an educational program that will enable museum leaders to meet the minimum standards for Fair Market Valuation compliance and to secure clear title to art in their collections on November 18. Recent advances in art valuation methodology using the licensing rates of Vatican Publishing and the Louvre Museum network can make this much easier.