What to Do When You Find Susan B. Anthony in Your Attic

This framed portrait of Susan B. Anthony was found by David Whitcomb in his attic, along with other well-preserved artifacts.

Three steps to help clients who discover unexpected treasure.

The excitement of someone realizing that they now possesses an item with great financial, social and historical value is something that we can all enjoy vicariously. Most recently, the story of David Whitcomb of Geneva, N.Y., finding a long-forgotten cache of photographic equipment, including the negative of a famous portrait of Susan B. Anthony, is one such example. 

So, what to do if you should stumble upon a treasure in your attic? Here are some steps we recommend for our clients.

Step One: Inventory

Many people, artists and collectors included, do not have a current inventory of what they have. The first step, which may require expert assistance, is to describe the assets, including: 

• A list of items and their location;

• Its creator, including joint authors and collaborations;

• The dates of both creation and acquisition;

• The contracts associated with any works, such as licenses, assignments, etc.; and

• Galleries or dealer names, along with their contact information; and any paperwork that refers to the artwork, such as catalogs, bills of sale and so forth.

Step Two: Aggregate

Discoveries like Mr. Whitcomb’s are daunting to catalog. A single piece of paperwork can determine the provenance of an item. Additionally, each item may be treated differently for tax purposes.

To simplify, aggregate items and their associated paperwork based on:  

Taxes: The IRS recognizes four distinct types of taxpayer based on the role that the taxpayer plays prior to a transaction: collector, investor, business investor and dealer and will tax the sale or inheritance of the item differently. 

Recognition: The negative of Susan B. Anthony is worth more than some of the other negatives in the collection because it is an image that people recognize. The role the item plays in the culture drives the value of the item.       

Liquidity: The ease with which Mr. Whitcomb could sell the negative is likely much greater than the ease of selling the photographic equipment as a whole. A highly sought-after item can easily be sold at auction or private sale even if poorly executed or heavily damaged because of its rarity. 

Premium: An item such as this negative is something that would create competition at an auction with the most well-heeled collectors and institutions hoping to acquire, so it would earn a premium. This premium is for items that are truly in a realm of their own, and require the most expert help in managing the preservation, transfer or sale. 

Step Three: Managing the Collection 

Have a buy-sell discipline. Clients need discipline in managing the collection that they now own: when to hold assets, when to sell assets and when to donate assets. A collection needs to be reviewed with a critical but unbiased eye on how it should be managed to enhance its value.

Have a personal representative with the knowledge and know-how to maintain and transfer artwork in your estate. In some circumstances, a cultural executor, such as a private curator or expert in the field, may be better equipped than family members to manage the disposition of artwork. Additional funds should be allocated for such administrative costs.  

Use Insurance policies to fund the administrative and tax costs for your estate. Life insurance provides liquidity to a collection. Property and casualty insurance and title insurance also manages risk and liability for clients during the sale or gifting of items.

Keep purchase and sale records. The names of galleries, dealers and auction houses, or other persons who might be interested in buying or selling your client’s artwork should be in a place where your personal representative could readily find them. This is especially true in a case where there is an assumed but no clear title to the items, such as art coming out of Europe before and after WWII, and art coming out of countries in economic and political turmoil. 

Specifically address copyrights. Copyrights can be created both by creating an object and by creating an image of an object (such as a print of the negative of Susan B. Anthony), which is otherwise in the public domain. If you are planning to make a specific item a donation to a charity, remember that that donation does not carry the copyrights to the object, unless specifically mentioned. A gift to an individual beneficiary of the same object may carry such rights, even if not specifically mentioned. By law, copyright transfers must be in writing and signed by the copyright owner and may need to be recorded with the U.S. Copyright Office. 

Specific instructions or restrictions on how items may be used or licensed. With items of significant social or historical value, you can feel a moral obligation that the items should not be sold. Similarly, for deceased creative artists, new books in the same series should not be commissioned, music should not be performed at certain venues, and so forth. Dealing with these restrictions will require significant cooperation with the future owners of the artwork or other items, so these restrictions should be clear and well drafted.

Has your client made arrangements for the maintenance and storage of the collection in the estate? The estimated total cost of the planned disposition of your collection, equipment and supplies (including storage, distribution, conservation) upon your death should be made, even if in the most basic terms. Sending a grand piano across the globe may cost much more than the piano is worth, and the beneficiary may not be able to carry those costs without assistance. Also, if artwork or other items are placed in long-term storage, one runs the risk of damage or loss if the storage faculty has a catastrophe. Your client’s visual art in particular will need to be stored properly, as will photographs, film and digital files.

Consider using split interest trusts and charitable foundations to manage art. A trust, LLC or family limited partnership could be the best way to manage a collection and its associated copyrights, licensing and management costs, when it is to be shared by a number of beneficiaries. In addition to a management trust, your client should be familiar with the use of split interest trusts (e.g., CRT, CLT, GRIT, GRAT) for transferring collections between generations.

*the information contained herein does not constitute legal advice or representation and should be used only for informational purposes.