Three Lessons from a Multimillion-Dollar Art Sale

 John Constable's "Salisbury Cathedral from the Meadows" jumped 1,000 times in value in just two years
John Constable’s “Salisbury Cathedral from the Meadows” jumped 1,000 times in value in just two years
In a recent article, attorney Matthew F. Erskine of The Erskine Company, which provides legal services for owners of unique assets, offers three lessons from a recent London auction. A painting bought for $5,212 in 2013 sold in February 2015 for $5.2 million, a thousand times the original price!

Erskine’s three lessons:
1) Your plans should adapt to the inherently uncertain valuation of artwork.
2) Record and preserve your information, especially if you do not intend to sell your artwork during your lifetime.
3) Spending money now will preserve what you have and what you know.

We couldn’t agree more, but would like to add that the same lessons apply to all high-value tangible assets in every category. Proper documentation through photo images, copies of purchase receipts, current appraisals, and descriptions of condition, location, provenance and other details keeps owners informed and helps close the information gap that too often exists between owners and their professional advisors.

Going forward, digitally cataloging fine art and other treasured assets, ether displayed prominently at home, hidden away in storage or located around the globe, can help owners and their trusted advisors better manage the complexities associated with the ownership of such high-value assets.

This digital library, which can include scans of confidential documents and data, may also prove helpful by providing family members, advisors and caregivers with critical information in the event of the owner’s mental or physical incapacitation.

Archival Property Solutions (APS) is a trusted resource for documenting and cataloging the tangible assets of high-net-worth owners who have substantial and complex holdings in multiple locations. We host the resulting digital catalog record on a private secure website that is perpetually accessible to owners and owner-authorized users on any connected device. Ongoing administrative support is provided as needed to ensure that asset information and access permission requests are accurate and up to date.

An APS digital catalog serves as a useful and valuable resource for Family Office activities and a wide range of supporting professional services including estate planning, tax strategy, insurance evaluation, wealth management and legal work.



Click here to see a listing of all Archival Property Solutions blog posts.


About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

Contact Archival Property Solutions at:

(866) 843-2100 or
e-mail us

When we receive your inquiry, we will determine the best way to match our services to your unique needs and circumstances. We look forward to hearing from you and will respond promptly and confidentially.

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Asset Protection: More Than a Legal or Investment Strategy

expensive-home-foyer-staircasesAs wealth grows, so too does accumulation of high-value assets such as fine art, jewelry, valuable collections, residential structures and luxury items like airplanes and boats. Owners take great pride and pleasure in these tangible assets, which can represent everything from business success to planned investment diversification to a cherished family legacy.

Such tangible property holdings, however, are often associated with high levels of complexity and risk. For instance, expensive properties in picturesque settings can be especially susceptible to violent weather, natural disasters and unforeseeable calamities. Unfortunately, those with the most to protect often are not fully aware of their increased exposures.

In this context, the definition of “asset protection” should be expanded to consider the consequences of prized assets being lost, stolen, damaged or destroyed. Important questions must be asked: Who will be responsible for mitigating these exposures? Is insurance coverage suitable or do unintended coverage gaps exist? How would the physical loss of such assets affect the owner’s wealth management or family legacy objectives?

An owner’s accumulation of high-value tangible assets in multiple categories and distant locations makes understanding and reporting relevant details to advisors a complex task. Documenting and cataloging these assets and securely storing the resulting digital catalog for private, confidential access facilitates real-time collaboration with family and professional advisors, and supports crucial Family Office and wealth management activities.

Proactive risk management demands that valuable assets be documented and cataloged before a catastrophe or criminal event can inflict substantial damage or loss. The owner can then focus on what matters most: comforting family members, rebuilding or repairing their damaged home, and saving, recovering, restoring or replacing their valued possessions.



Click here to see a listing of all Archival Property Solutions blog posts.


About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

Contact Archival Property Solutions at:

(866) 843-2100 or
e-mail us

When we receive your inquiry, we will determine the best way to match our services to your unique needs and circumstances. We look forward to hearing from you and will respond promptly and confidentially.

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Pros and Cons of Storing Your Valuables in Freeports

Unless you’ve built a secure, climate controlled storage room in your home to protect your valuables and collectibles, storing those items in a freeport may be an excellent option.

What is a freeport? Here’s a good description of one such facility from Q Wealth Limited’s website:

The Singapore FreePort
The Singapore FreePort
Singapore FreePort is a state-of-the-art secure storage facility that operates in its own duty-free zone adjacent to Singapore’s Changi Airport. The largest such facility in the world (270,000 square feet to be precise), it provides wealthy collectors with tax-free storage for their valuables.

“When you go to a bank and rent a safe, nobody knows what goes in. It’s the same thing here,” says Alain Vandenborre, president and co-founder of Singapore FreePort. “They only need to give a code that indicates the broad nature of the item—gold, wine or a painting. There’s no value, no ownership, no inventory list—all details are confidential. We offer more confidentiality than Geneva.”

Private rooms and vaults, barricaded by seven-ton doors, line the corridors. Unlike the free-port facilities in Switzerland, however, which are simply secure warehouses, the Singapore FreePort sought to combine security and style. A gigantic arching sculpture entitled “Cage sans Frontières” (Cage Without Borders), spans the entire lobby.


Freeports, of course, are not free. Far from it. The freeport in Geneva (one of six in Switzerland) charges around $12,000 a year to rent a small room for storage of treasures. For an intimate look at Geneva freeports, click here to read a terrific New York Times article titled Swiss Freeports Are Home for a Growing Treasury of Art.

Here is more information on freeports from Kathleen Tierney’s article on the ThinkAdvisor site:

The Singapore FreePort offers around-the-clock maximum security
The Singapore FreePort offers around-the-clock maximum security
For many high-net-worth individuals, free ports are their attics of choice. Over the past decade, these century-old former warehouses have become the repositories of great works of art, rare automobiles and coins, fine wines, and even gold bars and other precious metals. Especially large contemporary art pieces like massive Christo sculptures and even mini-submarines (among the newest toys of adventurous, super-wealthy people) are stored at these facilities.

The key motivating factors for warehousing these expensive items are security, confidentiality and tax advantages. Because the goods in a free port are technically in transit—the bonded warehouses were initially built to store goods in between shipments—they are accorded special tax-exempt treatment. This remains the case today, even if the valuables are stored for very long periods of time.


But beware—there are potential drawbacks to storing your valuable tangible assets in a freeport. Tierney notes on RiskConversation.com:

[T]here are a number of risks to consider with this type of storage facility. As pieces stored in free ports are technically considered “in transit,” their tax exempt status is contingent on their location around airports, seaports or other transit hubs. Thus, collectors need to be aware of the potential impact of low flying planes, coastal floods, and other weather-related catastrophes. One way to mitigate these risks is to store valuables in different free ports around the country.

Tierney also cautions:

LeConte “Conte” Moore, managing director at insurance broker DeWitt Stern in New York, said that while there are some advantages to storing valuables in free ports, collectors should think twice before putting all their eggs—Fabergé or otherwise—in one of these warehouses.

“Free ports often contain an enormous amount of highly valuable art in one location, which creates a large concentration of risk,” Conte said. “Because of this, insurance companies won’t always offer the lowest rates to insure these valuables.”

************

Ah, but there’s another downside to storing your treasures in freeports that these articles do not address. Namely, if you choose to store your valuables in a remote location, out of sight and far from home, you will be deprived of the enjoyment of viewing these tangible reminders of your achievements and may even be compromising the ability of your trusted advisors to adequately support their client relationships.

businessman with a cup of coffeeThat is, unless you’ve contracted Archival Property Solutions to document and catalog these precious items. Wealthy individuals and families can now keep their catalog of tangible assets current, organized and stored securely for private, confidential access. Imagine the enjoyment and satisfaction of being able to view clear images (from multiple angles) of every item stored in a freeport hundreds or thousands of miles away.

No longer will UHNW owners risk furnishing incomplete data to accountants, wealth managers, attorneys and other trusted advisors. A detailed digital catalog, complete with photo images, digital copies of purchase receipts, current appraisals, and descriptions of condition, location, provenance and other details, also protects the owner’s investments by ensuring that they have the right type and amount of insurance coverage and are empowered to keep that coverage up to date as asset circumstances change.

What’s more, imagine this worst-case scenario: Soon after an owner takes the initiative to stash millions of dollars worth of tangible assets in an offshore freeport, he loses his life in an accident or falls victim to dementia or mental illness. Without access to the kind of documentation provided by Archival Property Solutions, the owner’s family might never be able to locate and recover those assets.

While storing your tangible assets in freeports around the world may offer significant benefits, doing so also drives home the urgency of four important words: Know what you own. When you have private, secure, around-the-clock access via any connected device to photos and data that help you stay on top of every aspect of your high-value assets, you have the knowledge you need to fully manage those assets, from completing gifting plans to arranging delivery of sold items to keeping trusted advisors fully informed.

Ultimately, engaging Archival Property Solutions to compile a digital catalog of valued property, documents and data is not only practical, it protects the most valuable asset of all: your peace of mind.



Click here to see a listing of all Archival Property Solutions blog posts.


About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

Contact Archival Property Solutions at:

(866) 843-2100 or
e-mail us

When we receive your inquiry, we will determine the best way to match our services to your unique needs and circumstances. We look forward to hearing from you and will respond promptly and confidentially.

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What Has Your Casualty Insurance Agent Done For You Lately?

damaged-thinker-sculpture
In the Forbes.com article, What Has Your Casualty Insurance Agent Done For You Lately?, Ashlea Ebeling writes that there’s “more to rightsizing your insurance coverage than picking a deductible and paying the annual premium.” We heartily agree. Here’s how the article begins:

“When it comes to personal risk management, it’s so much more than just the purchase of an insurance policy,” says Brian Flood, author of Wealth Exposed, an insurance planning guide for high net worth individuals and their advisors (Wiley, 2013). “You really have to understand your clients’ lifestyle and ask them the right questions.”

Well said. Later on in the article, Ebeling writes:

Collectibles. Often collectibles are woefully underinsured—if they are insured at all. If you have art, wine, or other valuable collectibles, you need a collectibles rider to your homeowner’s policy or a separate collectibles policy. The best policies will pay market value up to 50 percent higher than the scheduled amount of coverage in case of loss. Having an inventory system to keep track of your collection, and its fluctuating value, is key.

That last sentence—Having an inventory system to keep track of your collection, and its fluctuating value, is key—should be read by high-net-worth owners as an urgent call to action. Inadequate documentation of valuable collections and other tangible assets could cost an owner hundreds of thousands of dollars or more should any possessions be lost, stolen, damaged or destroyed by fire, calamity, vandalism or theft.

Proactively managing these high-value treasures is best accomplished by creating a secure digital catalog that includes every category of tangible asset the owner would like insured. When maintained with current information (which may include photo images, digital copies of purchase receipts, current appraisals, and descriptions of condition, location, provenance, and other details), this digital catalog can help owners and their advisors determine if insurance coverage is suitable. A detailed catalog will also reveal whether any items of value have been inadvertently omitted from scheduled coverage. Claim time is the wrong time to discover that coverage is unsuitable.



Click here to see a listing of all Archival Property Solutions blog posts.


About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

Contact Archival Property Solutions at:

(866) 843-2100 or
e-mail us

When we receive your inquiry, we will determine the best way to match our services to your unique needs and circumstances. We look forward to hearing from you and will respond promptly and confidentially.

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Why Family Offices Need to Strategically Outsource

Russ Alan Prince
Russ Alan Prince

I consistently find great value in the writings of Russ Alan Prince, a founder and the Executive Director of Private Wealth magazine and author of the Serious Money column on Forbes.com. In this Forbes.com post, he explores why single-family offices may benefit from strategically outsourcing certain functions.

Archival Property Solutions, LLC is a prime example of a firm that offers a specialized service beyond the scope of a typical family office’s core competency. The dynamic that Russ Alan Prince describes in the article below is equally applicable, if not more so, to multi-family offices. We look forward to working with a variety of family offices to enhance their effectiveness and make them look that much better in the eyes of their very demanding clients.

SINGLE-FAMILY OFFICES EMBRACE STRATEGIC OUTSOURCING
by Russ Alan Prince

Single-family offices are often expensive propositions. They’re generally very much boutique operations employing high-caliber experts in the service of the very wealthy.

The costs of running a family office have always been a consideration, but have become even more scrutinized since 2008. According to Steffianna Claiden, founder and editor-in-chief of Family Office Review, “Both families with existing offices of some kind and families new to having an office have deduced that doing everything themselves can all too easily become a massively expensive headache. Hence the rise of “strategic outsourcing”—the trick is figuring out which functions make sense to keep at home and which to farm out. The second challenge is finding and evaluating suitable providers and then choosing the right one. Land mine city, doing all of that.”

Another leading authority in the field, Linda Mack, president of Mack International, LLC, explains, “Family offices are increasingly looking at how to best provide the highest level quality services to their family clients on a cost effective basis. This includes a comprehensive review of strategic outsource alternatives. An increasing number of them are ascribing to the view that if a strategic outsource provider can provide the service in question at a higher level of quality and excellence than we can in-house, can provide it at a better price, and can provide it without conflict and with transparency, it makes sense to strongly consider that alternative to best serve the family’s needs and objectives.”

“We’re seeing smart family members taking a hard look at the expenses attached to running their family offices,” explains Richard Flynn, principal at Rothstein Kass, “At the same time, the very wealthy have become clearer and more precise on just what expertise they need in various circumstances.” Combining these two considerations, the family offices creating the best solutions for the ultra-wealthy are the ones:

1. Identifying and concentrating on their high-impact core capabilities, and
2. Strategically outsourcing non-core capabilities, while
3. Maintaining diligent oversight on the professionals delivering the non-core capabilities.

These three organizational competences can prove problematic. The ability to determine and justify core versus non-core capabilities is often fairly difficult for many wealthy families. Big picture, the following equation conceptually captures the factors that need to be evaluated in determining whether to outsource capabilities:

(Frequency + Criticality) – (Cost + Exclusivity) = Determination

• Frequency is the likely amount of usage by the family office for the expertise.
• Criticality is the importance of the expertise to the family office.
• Cost is the differential expense of the expertise depending on whether it’s in-house or outsourced.
• Exclusivity is the level of requisite proprietary access to the expertise.
• Determination whether to bring the expertise in-house or not.

Another complication is that being able to adroitly select professionals to outsource is fraught with the potential for disaster. This is a function of decreased control thereby making sourcing independent professionals a very important process.

Strategic outsourcing, in effect, is an extremely powerful and ubiquitous trend in the family office universe. The issue is to engage in strategic outsourcing wisely. The answer is often extensive and ongoing diagnostic assessments coupled with the structural flexibility to adjust quickly.



Click here to see a listing of all Archival Property Solutions blog posts.


About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

Contact Archival Property Solutions at:

(866) 843-2100 or
e-mail us

When we receive your inquiry, we will determine the best way to match our services to your unique needs and circumstances. We look forward to hearing from you and will respond promptly and confidentially.

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Claim Time Is the Wrong Time

house-floodedIt’s not surprising that so many high-net-worth individuals are underinsured. They live such complicated lives that updating their personal insurance coverage to reflect a growing asset base can be low on their list of priorities. Unfortunately, that increased exposure leaves them vulnerable when underinsured assets are lost, stolen, damaged or destroyed.

A client’s financial assets are valued by investment managers every day as a matter of course, but the client’s non-financial assets, which may be displayed or stored in various locations, are not as easily valued.

When valuable assets are underinsured and not well documented, the owner’s financial risk can be substantial. In the wake of calamitous events, a family’s shock and grief is often compounded with regret at not having documented their possessions prior to the loss through photo images, digital copies of purchase receipts, current appraisals, and descriptions of condition, location, provenance and other details. Furnishing an insurance provider with a detailed list of affected property as promptly as possible after a loss can go a long way toward increasing the efficiency and reducing the stress of the claim filing process.

Unless insurance providers are diligent about reviewing and updating coverage at regular intervals, they can fail to direct clients to specialized policies designed for the unique needs of upscale owners. Lacking a thorough inventory of tangible property with current valuations, even Family Offices can’t effectively manage their client’s protection needs.

Archival Property Solutions can help by documenting and cataloging a client’s tangible assets—and traveling to distant locations to do so if need be. The resulting digital catalog can help ensure that the client is provided with the right type and amount of insurance coverage. Claim time is the wrong time to discover that coverage is unsuitable.



Click here to see a listing of all Archival Property Solutions blog posts.


About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

Contact Archival Property Solutions at:

(866) 843-2100 or
e-mail us

When we receive your inquiry, we will determine the best way to match our services to your unique needs and circumstances. We look forward to hearing from you and will respond promptly and confidentially.

Share

The Case of the Culpable Collector

honus-wagner-baseball-card
A mint condition T206 Honus Wagner baseball card was sold for $2.8 million in 2011

A colleague recently told me about a client who had an extensive and expensive collection of curios. He had rather sheepishly turned to her for help in documenting and cataloging it after his wife had insisted he do so. The client’s wife told him, “If you’re going to complicate our lives with your collection to this extent, you better get all the facts organized and detail a plan for me or the kids to follow in case it falls to us to untangle all of it.”

It’s a fair point and one that every serious collector should consider. Tomorrow is promised to no one. If the collector were to absent-mindedly step in front of a bus, his wife and kids would be left to literally pick up the pieces of his cherished collectibles. Chances are they wouldn’t know what the collection was worth, who to trust to appraise it or how to go about selling it.

Amassing a valuable collection of any type carries with it the responsibility of documenting it for the sake of the loved ones you may suddenly leave behind. Absent advance planning, every situation involving valuable assets can or will become someone else’s problem in due time.



Click here to see a listing of all Archival Property Solutions blog posts.


About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

Contact Archival Property Solutions at:

(866) 843-2100 or
e-mail us

When we receive your inquiry, we will determine the best way to match our services to your unique needs and circumstances. We look forward to hearing from you and will respond promptly and confidentially.

Share