One great advantage offered by an independent appraisal organization is its ability to venture into new territory and take time and effort to research and devise innovative new valuation methodologies.
Among the notable innovations in the field of art appraisal is that of determining fair rental value. Take for instance a couple who has devoted many years to studying, researching and building a collection of paintings and sculpture that have not only brought them immense pleasure but which they wish to retain until their deaths. They also wish to pass these works on to their heirs to enjoy as much as they have enjoyed them. Their Trusts and Estates attorney advises them to place their entire collection in a trust to which they pay rent to lease the art. Interesting, but does Internal Revenue Service (IRS) approve?
As a matter of fact, this is an increasingly common estate-planning tool, and IRS has not challenged the O’Toole-Ewald Art Associates, Inc. (OTE) fair rental value structure for more than two decades. OTE began original research in 1990, when fair rental value appraisal had never been attempted in the art field. To assess reasonable rates, OTE queried art rental companies and art lending museum galleries, among other sources, and relied upon some of the precepts of similar real estate rentals.
Twenty-six years later, an immense and ongoing database of fees charged in the international art rental market has served to underscore the validity of OTE's fair rental value program, which has been applied to art collections nationwide. The ability of independent appraisal firms to undertake this type of innovative research opens up the appraisal profession to new and exciting possibilities of now and in the future.