An outline of the issues that can arise when cultural property is purchased, sold, donated and inherited. Cultural property and art law are complex, but very few cases actually make it to trial and fewer still proceed to resolution there. Many uncertainties exist regarding the application of US laws. We hope to alert practitioners to the pitfalls of ownership of cultural property for the unwary and to help them meet the special needs of clients whose assets include art and artifacts.

Cultural property and art law is a complex area of law and the background materials provided here are by no means comprehensive. At the same time that the field is complex, very few cases actually make it to trial and fewer still proceed to resolution there. Therefore, many uncertainties exist regarding the application of US laws, and it is often not possible to provide the step-by-step guidance that practitioners would find most useful. Instead, we hope to alert practitioners to the pitfalls of ownership of cultural property for the unwary and to help them meet the special needs of clients whose assets include art and artifacts.

Cultural property is different from other forms of property. Sovereign foreign nations and tribal or cultural groups may claim ownership based upon national ownership, national or tribal identity, or moral rights that may be determined to be superior to claims based upon being a good faith purchaser. Unusual restrictions may apply to transportation across borders, and international treaties may create obligations between nations to restrict trade or repatriate art and artifacts long in circulation. Even the materials that an antique or ancient object is made of – feathers, ivory, tortoise shell, or other natural materials – can affect lawful possession and transfer, and these issues are briefly addressed here since such materials are common in objects considered cultural property.

Conflicts over cultural property should not be confused with Holocaust claims or other stolen art claims in which art is “stolen” in the traditional sense from a specific owner, or possession is the result of a wrongful act in which a person obtained property that belonged to another person or institution.

Objects that were purchased from an individual or business having apparent good title and objects that have been in circulation outside of the country of origin for decades, changing hands several times or even donated to a museum, may still be deemed “stolen” under US law and may be subject to a variety of cultural property claims from a foreign nation. One artifact may be free of any claim due to its ownership history or its date of export prior to enactment of a foreign ownership law, while another virtually identical object with a different ownership history could be subject to seizure. Even if legal ownership is not an issue, self-imposed ethical rules may prohibit museums from accessioning items from private collections that have long been intended for donation.

Although virtually anything old from anywhere in the world could be termed cultural property, a much more limited universe of objects – notably, ancient and ethnographic art objects – have been the subject of greatest controversy. Objects deemed cultural property are quite varied and include not only unique objects — sculpture, painting and decorative arts such as stonework, metalwork, ceramics, and textiles — but also widely-collected objects that exist in multiples of many thousands, such as ancient beads and coins. Despite the ostensible connection between a “cultural” item and one showing traces of human existence, certain nations have claimed that their “cultural property” includes dinosaur fossils dating to eras before humans walked the earth.

As of this writing, 127 nations have signed the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export or Transfer of Ownership of Cultural Property.[1] The 1970 Convention is not self-executing: merely being signatory nation to it or to the more restrictive 1995 UNIDROIT Convention[2], is rarely the defining element in a foreign nation’s cultural property policy, which is primarily interpreted through its domestic laws. The different perspectives on cultural property management held by different nations means that an object’s country of origin makes a difference in asset management or estate planning.

Some nations, such as Japan, have very liberal policies that encourage the global distribution of all cultural objects except a precious few that are deemed inalienable; other nations, such as Peru or Egypt, assert a right of ownership to virtually all antique objects found within their current political boundaries, even if the object left the country of origin fifty or a hundred years before. Thus, the planner assisting a client who owns cultural property from a specific country will find it useful to know something of the nation of origin’s past statements and actions in the field of cultural property policy.

It makes a difference too, whether a foreign nation’s cultural property law is an ownership law, capable of being enforced under US laws, or a law restricting export, as export laws are not generally deemed enforceable in the US. This area of US law continues to develop: US courts have made determinations in only a few cases that specific foreign laws are national ownership laws.

Literally, thousands of foreign laws have been enacted over time that affect cultural property. Even a foreign law that appears on its face to make a clear declaration of ownership, may or may not have been enforced within the source country or even have been publicly available at the time of export. These and other factors are relevant to whether an untested foreign law is enforceable in the US. Therefore, significant questions remain with respect to ownership and title of a wide variety art objects in circulation in the US today.

MEETING CLIENT GOALS AND PROTECTING CLIENT INTERESTS
Americans have been fascinated by collecting ancient art since even before the American Revolution, when Thomas Jefferson laid out his dreams for a gallery of ancient sculpture in his plans for Monticello in 1771. Many Americans are justifiably proud of their collections of art and antiquities and look forward to passing their collections on to family members or to the public as donations to local cultural institutions, alma maters, and even to world-renowned global museums.

Many collectors feel that gifting to a museum is the most enduring and positive legacy that they can leave behind. At least 85% of the collections in US museums are acquired by gift, and the vast majority of gifts to museums are from individuals, not corporations. US museums are financially dependent upon their symbiotic relationship with collectors, whose enthusiasm for their particular field translates not only into donations of objects, but also into direct monetary support for the museums that share their passion for a particular type of art.

When charitable donation of art is a key element of tax planning, both during life and at death, planners need to know the laws pertaining to transfer of cultural property and the specific requirements for accession of artworks deemed cultural property in the donee institution and in the widely used museum guidelines issued by the Association of Art Museum Directors[3]. Making a public gift is just that – public – and subject to greater scrutiny by the various stakeholders in the cultural property arena than is the passing of an object by will to family or friends.

When a collection passes to individual beneficiaries rather than to institutions, dealing with art assets at death may simply be a matter of documenting a transfer. If art must be sold, the fiduciary may need assistance in dealing with an unfamiliar market. Dealing with art can require time-consuming documentation and appraisals.[4]

Not all transfers go smoothly, however. At its worst, transferring art assets with unknown or questionable provenance can involve civil claims for conversion, unjust enrichment or restitution, and even the possibility of criminal prosecutions or civil forfeiture actions under statutes including the National Stolen Property Act[5], the Convention on Cultural Property Implementation Act[6], the Archeological Resources Protection Act[7], and other laws.

UNCERTAIN AND CONFLICTING LAWS AND LEGAL EXPOSURE TO CIVIL OR CRIMINAL LIABILITY
US owners of foreign cultural property need to know if they have good title – and whether or not there may be civil or criminal exposure under any of the legal theories described in the outline of cultural property laws earlier in these materials. The effect of foreign laws on title and ownership of cultural property in the US is legally complex and contains many gray areas. Many foreign nations have enacted national ownership laws that provide that the foreign state is the owner of all art over a certain age in that country. A few of these laws have been in place since the 19th century, more were enacted during or after WWII, and in the last 30 years, most nations have enacted, updated, or expanded the scope of export and national ownership laws. Notably, the US itself has no such law or policy, and art and artifacts from the US, with the narrow exception of certain Native American artifacts and human remains, can be freely traded, imported and exported.[8]

Most Americans are familiar with the most celebrated international claims for cultural property, such as the 200-year-old Parthenon marbles dispute, or have heard of cases involving antiquities looted from archaeological sites. Legal practitioners advising collectors or museums should also be aware that foreign nations’ claims over cultural property can extend to surprisingly recent objects or objects that were legally privately owned in the source nation and then sold and exported without a permit.

Foreign definitions of “national” cultural property may include items made even in the 20th century, including stamps, old currency, and photographs or documents.[9] Italy, for example, has a law enacted in 1939 that claims national ownership of all works of Italian cultural heritage exported without government license. This includes most paintings and sculptures, including the work of non-Italian Impressionist artists such as Van Gogh.

The fact that the vast majority of global antiquities in circulation do not have a lengthy ownership history makes it difficult if not impossible to have definitive knowledge regarding whether or not a current owner has good title to an object with respect to a national ownership claim. In the past, such records conferred no US legal status and were not considered worth preserving.  Often, records of importation or purchase have simply been lost. Even when good records exist, there is often no consensus among law practitioners or court-made legal guidance as to whether a foreign ownership claim may be enforceable under US law.

A claim based upon a national ownership law is at least theoretically enforceable in the US and may lead to questions regarding title, a lack of marketability, inability to donate to charity and even allegations of criminal possession. Civil claims of ownership may arise not only from claims by a source nation but also from claims by tribes or cultural groups of communal ownership.

Foreign laws simply outlawing export without permission are not sufficient to form a claim in US courts unless there has also been a violation of a US law such as by making a false statement on import.[10] However, the distinction between a national ownership law and an export law is not always obvious. Even apparently unenforceable foreign export laws may give rise to civil litigation in the US, and because of a poor understanding of US law among some museum administrators and staff, the mere existence of a foreign export law may form a practical barrier to the donation of artworks from that nation.

PERFORMING DUE DILIGENCE
In the 1980s and 1990s, many museums sent letters of inquiry, along with photos and descriptions of objects they were considering acquiring, to the ministry of culture, major cultural institution or archeological department in source countries. The letters asked, essentially, do you claim this object? Is anyone looking for it?

If, as was almost always the case, no one responded within six months or so, the museum felt this was sufficient due diligence on its part and went ahead with the purchase or accepted the donation. (In fact, although until the 1990s, US Customs had no interest whatsoever in source country documentation, when antiquities are imported today, US Customs and Border Patrol often detains the objects and asks potential countries of origin similar questions: “Is this object stolen? Have you any record of it?”[11])

Now that the ownership of cultural property has become a more contentious issue, museums generally do much more extensive research and engage more persistently with source country cultural officials. A museum may also post objects on the Association of Art Museum Directors’ Object Registry[12] website or on the museum’s own website, in effect giving notice to a broader class of potential claimants. In addition, many museums are in the process of putting their entire collections, along with each object’s ownership history, on globally accessible Internet sites.

It has been well said that museums are the institutions best capable of researching artworks and determining provenance. It is part of the museum’s job to do this research, particularly art historical research and the identification of art objects stolen from individuals such as Holocaust claimants, or taken from inventoried collections, temples, monuments, or churches. Going even further, a few US museums have engaged “provenance specialists” or “provenance curators.” These individuals are researchers whose job is to investigate the history of objects in the collection or being considered for acquisition and help to decide if the museum should keep, accept or purchase the object.

While provenance curators can provide invaluable assistance to museums by identifying objects that should not be accessioned or that merit return to source countries, they are not lawyers and not all are competent to analyze claims or determine the legal effect of foreign or US laws. Practitioners should not assume that decisions to reject or return objects are reviewed by museum counsel and should be prepared to work collaboratively and if necessary to challenge analyses by museum staffers unfamiliar with the law.[13]

Performing “due diligence” by following museum-like procedures is simply not feasible for many private collectors or art dealers. The cost of research may be greater than the value of an object[14] and the non-institutional collector often has no access to source country cultural authorities or inventories. Source countries currently do not maintain open-access databases of stolen or illegally exported art, publicize the process for giving notice of a transfer of ownership to source country cultural authorities, or make their records of export permits issued accessible. (In addition, many countries that “require” export licenses for lawful export, actually have no permitting process.[15])

Art dealers and collectors have often utilized the Art Loss Register, a private commercial database of stolen objects, to research and register objects in their inventory or collections. This service has been useful in the recovery of numerous stolen works of art, but is limited in its effectiveness, as few art source countries appear ever to avail themselves of the registry to look for missing objects and placing an object in the registry does not preclude a future claim. In addition, the fee for a collector to register and search the database for each object is a significant cost when there are numerous objects in a collection.[16]

A number of art collectors, art dealers and museums have encouraged development of an accessible, online global database of ancient objects, providing transparency, a permanent record of object transfers, and a form of digital “title.” They suggest that such a system could facilitate licit ownership, scholarly access, and provide a starting point for firm provenance and eventual repose.[17] Until such an improved system for documenting objects is put in place, collectors of ancient art can follow the same best practices that a collector of modern art would by creating a private record with photographs and measurement, and demanding a complete record of the history of the object before purchase, the names of former owners if known, and of any publication or exhibition.

A practitioner’s due diligence on a client’s behalf should include not only having knowledge of pertinent US laws, but also researching foreign laws potentially affecting a client’s collection. This can be difficult: many foreign laws are not readily available even today via the Internet. Access to some is available through either short or long-term subscription services to the International Foundation for Art Research’s Art Law and Cultural Property Database,[18] which is a valuable resource for all practitioners dealing with art issues. Practitioners should note that although the IFAR website provides past as well as current source country laws, the website’s analysis of the effect of foreign laws generally deals with present law, while the legal status of an object may depend on an earlier law.

The UNESCO Database of Cultural Heritage Laws[19] includes foreign laws, decrees, and other documents related to the general subject of cultural heritage. This website does not include analysis of specific laws and while it is a very valuable resource, its collection is by no means comprehensive.

In a recently published article, attorney William Pearlstein provides examples of the issues faced by practitioners in determining the applicability of foreign laws on cultural property.

“Foreign patrimony laws can be difficult (e.g., Cambodia and Indonesia) or impossible (e.g., Yemen) to obtain in their native language, let alone in English translation (e.g., Mongolia).

Once the law is found, it may be difficult to obtain reliable legal advice as to its meaning and construction. Foreign national patrimony laws vary widely in substance. Some laws provide for the vesting in the State of all archeological materials discovered after a specified date (e.g., Mexico and Egypt). A small number of others do not, and provide alternate models that allow for private ownership once the needs of national heritage are deemed satisfied (e.g., Japan, England and Israel). Others, like India, permit domestic private ownership but prohibit export. Some provide for vesting on unauthorized export (e.g., New Zealand), some for hybrid treatment, such as vesting of all antiquities discovered prior to a certain date but registration and a right of first refusal with respect to other cultural property (e.g., Italy nationalized only archeological objects that were not privately owned before 1902 and permits export of privately–owned materials not deemed to be important to the national patrimony). England provides for a preemptive right of purchase for objects deemed important to the national heritage.”

“Furthermore, there is an important distinction between foreign ownership laws, which are enforceable under McClain, and foreign export controls, which are not. But this distinction is not always clear to a US importer and may only be finally determined upon testimony of expert witnesses and judicial review. In addition, some foreign nations (e.g., Egypt, Italy, Cambodia) have adopted a series of patrimony laws over the years addressing the ownership and export of cultural property; it can be difficult or even impossible for a US importer to understand which law(s) govern a particular object, especially if the date of original export is unknown and potentially unknowable. The federal courts have succeeded in creating a judicially-crafted import regime under which the rights and remedies of the source nation and the liability of importers and remote owners may never be clarified until after a lengthy trial, thereby creating a state of uncertainty and anxiety that fails to protect archeological context or objects and benefits neither importers, archeologists nor source nations. It is no surprise that construction of arguably ambiguous foreign patrimony laws has been a central issue in an increasing number of reported decisions.”[20]

While the above raises key issues for the active collector; the estate planner may reasonably wonder why he or she should be concerned with importation of objects, if the planner is dealing with artworks long held in the US. It has generally been assumed that although long-term US ownership cannot prevent a claim from arising under the National Stolen Property Act based upon a foreign national ownership claim, the longer an object has been outside of the country of origin, and the more public the ownership has been, the less likely it is that a claim will be brought. Nonetheless, knowing possession of a “stolen” object by a downstream owner implicates the National Stolen Property Act,[21] and the “safe harbor” provisions of the Convention on Cultural Property Implementation Act discussed below may be insufficient to preclude a National Stolen Property Act claim, even against an artwork that has been in a US collection for decades.

Researching foreign laws can impose a difficult burden on the collector, and it is possible that the most diligent US inquiry will not provide a clear answer. In rare circumstances, it might be necessary to hire foreign counsel to investigate and examine foreign laws. For practical reasons, unless there are indications of wrongful activity, the practitioner must apply common sense, insist that the client ask hard questions before buying and that he or she document artworks to the fullest extent possible.[22]

SAFE HARBORS UNDER THE CONVENTION ON CULTURAL PROPERTY IMPLEMENTATION ACT
The US currently has agreements with the following nations under the Convention on Cultural Property Implementation Act (CPIA): Belize, Bolivia, Cambodia, Colombia, China, Cyprus, El Salvador, Greece, Guatemala, Honduras, Iraq, Italy, Mali, Nicaragua and Peru.[23] As of this writing, a request for a cultural property agreement with Egypt is under consideration – and in fact has been announced as a done deal by the Government of Egypt.[24] Under Section 312(2) of the CPIA, if an artwork has been held by a bona fide purchaser in the US for twenty years, or if it has been published and in the US for ten years, or if it has been cataloged and displayed publicly in US museum or cultural institution for three years, then the object should not be subject to seizure under the CPIA. These provisions of the CPIA are often termed its “safe harbors.” Note, however, that if an object was stolen in the traditional sense from an owner’s inventory – for example from a church, or museum, a private collection or an archeological site – then a thief can never pass good title and no safe harbor applies under the CPIA.

Recent civil forfeiture claims provide examples of why there are still concerns regarding title and ownership even when objects come from countries that do not have any agreement with the US restricting imports under the CPIA or have been privately owned or publicly exhibited outside of the source country for many years.

CIVIL FORFEITURE

US v. Mask of Ka Nefer Nefer[25] and SLAM v. US [26]

Downstream owners who have no knowledge of how or when an object left a foreign source nation can nonetheless face claims that a source nation has superior title. An example is a lengthy and convoluted case involving an ancient Egyptian mask purchased by the St. Louis Art Museum (SLAM) that began in 2011 and was finally resolved on June 12, 2014. In response to the US government’s appeal of the district court’s dismissal — twice — of the government’s case against the museum last year, the Eighth Circuit held on procedural grounds that the district court had not abused its discretion in dismissing the case, leaving “for another day” any discussion of what it described as “an attempt to expand the government’s forfeiture powers at the likely expense of museums and good faith purchasers in the international marketplace for ancient artifacts.”

In 2011, St. Louis Art Museum representatives were told by federal authorities that they intended to seize a mask SLAM had purchased in 1998 that the government claimed was stolen. The museum requested a declaratory judgment that the mask could not be seized because the statute of limitations had run and the government could not produce evidence that it had been stolen or smuggled into the US. The art dealer offering the mask described the mask as having been excavated at Saqqara in 1952 and provided letters showing a chain of European ownership by various individuals. The museum sent photographs and a description to the director of the Egyptian Museum in Cairo in 1998 and eventually received a letter in which the director declined to identify the mask as stolen. The museum checked the stolen art databases of the Art Loss Register, INTERPOL, and the International Foundation for Art Research, and hired an independent scholar who reported that the mask had likely left Egypt prior to imposition of Egyptian law prohibiting export. The museum then purchased the mask for almost $500,000 and placed it on display.

The US government investigation provided a somewhat different story of the mask’s ownership history. After its excavation in 1952, the mask was stored for 5 years in Saqqara, then shipped to Cairo in preparation for a traveling exhibit that never took place. The mask was sent back to Saqqara from Cairo in 1962, then boxed and sent again to Cairo in 1966. In 1973, the box contents were inventoried and the mask was missing. In 2006, according to a US government pleading, the Egyptian Supreme Council of Antiquities became aware that the mask had been acquired by the Saint Louis Art Museum. The US government filed an in rem forfeiture claim in March 2011 asserting that there was probable cause to believe that at some time between 1966 and 1973, the mask had been stolen from Egypt and later introduced unlawfully into the US

The museum moved to dismiss on the basis that the government’s evidence was insufficient to make a claim, and in March 2012, the district court agreed, dismissing the complaint for failure to state a claim. The district court said, essentially, that if the government claimed the mask was stolen, it should show some proof of the theft. The US Attorney filed a motion for reconsideration and asked leave to file an amended complaint, both of which the court denied in June 2012. The US Attorney immediately appealed. Negotiations between federal authorities and the museum took place between 2012 and April 2013 but did not resolve the matter. The government’s appeal was heard in December 2013 before the Eighth Circuit, which held in June 2014 that the district court’s dismissal was proper. This decision should conclude the matter, but Egypt’s Minister of Antiquities stated after the decision that Egypt would not abandon its claim and would “resort to the private sector in the United States to practice pressures on St. Louis Art Museum.”[27]

US v. A 10th Century Cambodian Sandstone Sculpture[28]

Research into an artwork’s history and into the laws of its nation of origin is part of due diligence by art collectors and their advisers. However, a legal analysis under the National Stolen Property Act, even an extensive one performed by experienced counsel, may not provide a sufficient answer to the question of whether a long-term owner or a source nation has lawful title.

In April 2012, Sotheby’s accepted consignment of a Cambodian statue from a European collector who had inherited it from her husband. The statue had been purchased by another Belgian collector from a well-known London art dealer in the 1970s. It was identified by the auction house as one of a pair of statues, the other having been acquired by the US collector Norton Simon and donated to the Norton Simon Museum in Pasadena, CA, also in the 1970s. Sotheby’s ineffectual attempt to contact the Cambodian government regarding its intent to sell the statute resulted eventually in a Cambodian demand for its return.

The US government seized the statue after it was imported into the US in 2012. The government alleged that the sculpture was stolen from Koh Ker, Cambodia, from a known temple, Prasat Chen, based upon a recently published archaeological survey that showed the feet of two statues remaining in situ. US federal prosecutors filed an in rem action against the statue on behalf of Cambodia and alleged that Sotheby’s knew the statue was “stolen” under the terms of the National Stolen Property Act at the time it was imported. Later, prosecutors asserted that although Cambodia’s modern Law on the Protection of Cultural Heritage dated only to 1996, French Indochina and then Cambodia had enacted a series of national ownership laws starting around 1900 that vested ownership in the government of Cambodia. Sotheby’s maintained that the consignor bought the Cambodian statue in good faith in London in the 1970s and that Sotheby’s did not know the statue may have been stolen. They also contended that the colonial laws from 1900 and 1925 that the government asserted vested ownership of the statue in Cambodia were ambiguous and insufficient to support an alleged violation of the US National Stolen Property Act.

Although a number of legal specialists thought it unlikely that the early Cambodian laws could meet the McClain and Schultz tests in making a clear declaration of national ownership or a showing that they were enforced in Cambodia, the forfeiture case settled in December 2013 with an agreement by Sotheby’s to send the statute to Cambodia and by the US government to relinquish its claim that Sotheby’s or the owner knew the statue belonged to Cambodia or had provided any misleading information. The probable expenditure of close to a million dollars in legal expenses by Sotheby’s even before trial, the prospect that the court would not make a determination regarding the validity of the French Indochinese laws until trial and the uncertainty of having potential criminal claims or liability raised at trial appears to have been sufficient to force a settlement. Within a few months after announcement of the settlement, the Norton Simon Museum announced that it would gift its matching statue, on exhibit since 1972, to Cambodia. Other museums have followed suit, despite the apparent absence of any legal grounds for forfeiture.

CIVIL SEIZURE ON IMPORT, EXPORT OR SALE
Civil seizures of items in the process of import into the US that have their origin in nations with bilateral agreements under the CPIA are not uncommon, even when the items arrive from another country and are entered under the safe harbor provisions of the CPIA. Several recent academic symposia have discussed the propriety and extent of this form of administrative forfeiture, which often costs more to challenge than the imported objects are worth. [29]

The possibility of seizure by US Customs and Border Protection could be an issue for estate planners attempting to market cultural assets overseas, should they wish to bring unsold objects back into the US A strict policy of detailed documentation of the items in the US and contacting US CPB in advance of sending the material overseas could assist to document the import. However, if the country of origin is one with which the US presently has an agreement under the CPIA, then re-entry into the US may not be possible unless the current owner has documentation of the original lawful import or proof that the item was in the US prior to imposition of export restrictions, and in the event of a claim under a national ownership law, even that may not be sufficient.

Planners should be prepared to take additional steps to verify that the documentation of prior import will be acceptable to US Customs on return. It is recommended to consult a specialist Customs attorney prior to undertaking any export or re-import of art and artifacts that may be deemed cultural property.

Legal advisers need to be aware of the laws that may – or may not – pertain to their client’s collections of art in order to ensure that US law is followed in any attempt to claim art or artifacts during probate.[30] As seizures are not often publicized, only anecdotal evidence may be available.[31] Art law attorney Richard St. Hilaire has identified certain seizures as inappropriately based upon alleged violations of the CPIA.[32]

AUCTIONS AND MUTUAL LEGAL ASSISTANCE TREATY REQUESTS
Auction sales are often favored by fiduciaries in probate as an open, public sale mechanism. Advisers need to be aware of claims and actions other than seizure that may result from placing even minor pieces of cultural property from art collections at auction.

Auction houses in the US take a variety of approaches to accepting consignments of international cultural property for sale. The auction giants Sotheby’s and Christie’s US offices are now generally reluctant to accept consignment of items unless they can be shown to have left the source country prior to 1970 – even if the current owner purchased the artwork from the auction house itself.[33] Although export from the source country prior to 1970 has no legal effect on the status of the object in the US or elsewhere, evidence of pre-1970 export is now a major factor in the prices realized in sales of ancient art. Artworks with pre-1970 provenance are valued far higher than a few years before and prices for others have dropped as a result of adoption of a pre-1970 standard for accession by many US museums. While the largest auction houses seek these upper-tier objects for economic reasons, smaller auction houses continue to accept objects for auction from legitimate consignors, recognizing that it was and still is lawful to buy and sell ancient art in the US unless it is shown to have been stolen.

Any auction house that accepts antiquities for sale can now expect to have the auction closely followed, and sometimes interrupted, by US federal agencies. Nations pursuing investigations and repatriation of objects at auction in the US often use Mutual Legal Assistance Treaty requests (MLATs) to obtain information on objects placed for sale. MLATs are formal agreements between countries that create international legal obligations to assist one another in criminal investigations and prosecutions. MLATs enable law enforcement officers from a variety of agencies to obtain evidence or ask questions in another country. The last-minute timing of such requests often has the effect of halting the auction sale.[34]

In the event that a private sale is used to dispose of cultural property assets on death, advisers should be aware that purchasers value receiving the most comprehensive and detailed documentation possible, regardless of the length of time an object has been in a collection. For this and other reasons, clients should be encouraged to document their ownership history as fully as possible while memory is fresh and transactions can be traced.

MUSEUM DONATION and ACCESSION
The legal practitioner whose clients include collectors of any kind of art should be familiar with museum loans and museum and other charitable donations. Dealing with cultural property adds another dimension to such transfers. While regulations governing charitable gifts are well covered in the general estate planning literature, museum organizations have imposed specific guidelines on their member institutions regarding donation, purchase, research, exhibition and publication of cultural property. These are guidelines only; there are exceptions that should be considered, and it must be remembered that these are not based on any US law.

The giant American Alliance of Museums (AAM) has established guidelines for ethical acquisition and other museum best practices.[35] The AAM encompasses the entire range of museums from small town historic houses to natural history museums and its ethical guidelines primarily address “big picture” issues about how museums should operate. The International Council on Museums (ICOM) has also published best practices addressing due diligence regarding acquisition of antiquities.[36] These generally discourage acquisition unless an object can be shown to have been legally exported.

Most importantly for the US legal practitioner, the Association of Art Museum Directors (AAMD), which represents 170 museum directors in the US, Canada, and Mexico, has approved a series of acquisition guidelines for its members, which include the largest art museums and those most concerned with collecting, preserving, and display of antiquities.

Over time, the AAMD guidelines have gradually stiffened the restrictions on acquisition and acceptance of ancient and ethnographic objects. The 2004 AAMD guidelines allowed member museums to acquire objects that had an ownership history outside of the country of origin of at least ten years, thus paralleling the “safe harbor” in the CPIA. The guidelines urged transparency in acquisitions, strict observance of US law, and established specific procedures for acquisitions if, after due diligence, no information came to light that stood in the way of purchases, gifts, or bequests.[37] As part of the larger global dialog taking place regarding museum acquisitions,[38] AAMD’s guidelines helped stimulate discussions about responsible collecting by museums and the importance of a licit market.

The revised 2008 guidelines adopted November 1970, the date of the UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import and Export and Transfer of Ownership of Cultural Property, as “the most pertinent threshold for the application of more rigorous standards to the acquisition of archaeological materials and ancient art as well as for the development of a unified set of expectations for museums, sellers and donors.” As a result of what has come to be called the “1970 Rule,” many museums will not purchase or accept for donation any object that entered the US after 1970.[39]

The 2008 guidelines also established a searchable Object Registry on which museums could list objects proposed for acquisition in order to facilitate claims and ensure a higher level of public transparency for members museum’ acquisitions.[40]

The most recent January 29, 2013 revision to the AAMD Guidelines on the Acquisition of Archaeological Material and Ancient Art[41] (included in full in these materials) addresses gift and estate plans made, but not carried out, prior to the 2008 revision. In sum, a museum may accept a gift or bequest if the donor signed a promise to gift, a will, a trust, or other document setting forth his intent to donate or bequeath the artwork to the museum prior to 2008, the gift was on long term loan to the museum before 2008, or the museum had memorialized its expectation of receiving the gift or had accepted a fractional interest in the gift before 2008.

The 2013 revision identifies the facts and circumstance that are relevant to a decision to acquire a work, and clarifies that if an acquisition must be posted on the AAMD Object Registry because it was acquired based on an exception in the Guidelines, the posting must explain how the acquisition fits one or more of the exceptions.

The exceptions provide for significant museum discretion: absent proof of lawful export, the museum may make an “informed judgment” that the artwork was “outside its probable country of modern discovery before 1970 or legally exported from its probable country of modern discovery after 1970,” or that the cumulative facts and circumstances allow it to make an informed judgment to acquire the Work, including but not limited to the exhibition history of the artwork, its publication, the provenance history of other artworks excavated from the same site or area, and any claims made against prior owners with respect to other artworks.

This more detailed statement of the 1970 “rule” requires the museum to “balance the possible financial and reputational harm of acquiring the Work against the benefit of collecting, presenting, and preserving the Work in trust for the educational benefit of present and future generations.”

Despite these exclusions, many museums treat the AAMD guidelines as a 1970-or-nothing standard. As a result of the blanket adoption of the 1970 date as a threshold for exclusion from acquisition by many US museums, there are a large number of objects now in private hands whose provenance is uncertain or unknown that will not be acquired or accepted as loans by US museums.  Objects excluded from acquisition by member museums cannot have the benefit of professional museum exhibition, publication, or conservation. Because such objects can have no permanent protection (many run the risk, over time, of deterioration, damage or destruction), these objects are often termed “orphans.” The absence of documentation going back more than forty years for objects in private collections, including many objects exported from source countries well before 1970, has the result that a large number of objects in US private collections will be excluded from future acquisition by AAMD Member museums.

The AAMD’s Introduction to the 2013 revisions states that one reason the 1970 date was adopted was in hopes that source countries would treat that date as a threshold date as well, and would refrain from claiming art objects exported prior to 1970. Although the Introduction states that some nations have done so, this author knows of none that have officially adopted or acknowledged such a policy change. Moreover, highly publicized claims for items exported decades prior to 1970 continue to be made by Turkey, Greece, Italy, Peru and other important art source nations.

PRACTICE POINT: Regardless of the date on which an art object was exported from the source country, some museums have added new contractual language to the terms of acceptance of antiquities to require the sellers or donors not only to guarantee authenticity but also that no laws were violated in import or export – a requirement about which few downstream collectors or art dealers could conceivably have knowledge. Purchase agreements may also require a seller to refund the purchase price if the museum “surrenders” the artwork without stating the circumstances under which a “surrender” could take place. Other provisions may require the seller or donor to indemnify the museum in full against the cost of having to defend a legal claim. Legal advisers should carefully review all deeds of gift, warranties, and other paperwork association with a donation of works of art and consider drafting alternative agreements for clients who donate artworks.

SPECIAL ISSUES – COINS
Ancient coins are widely collected in the US and internationally, and until recently were freely traded in an international market. Many coins were widely copied in mints scattered throughout Europe and Asia in ancient times, were distributed in the millions across routes of trade in the ancient world and have circulated as popular collectors’ items in the modern market for decades.

The imposition of import restrictions under the CPIA on coins from Greece, Italy, China, Bulgaria, and Cyprus poses significant issues for management of coins as assets of estates, as coins that are found in these countries are also found in other countries with which the US has no agreement limiting importation. Since coins rarely have a recorded ownership history, it may be difficult to prove that the import restriction did not apply on import and will not apply if the coin is re-imported. Estate planners should advise coin-collecting clients of the restrictions on bringing coins into the US or sending them overseas for sale, and encourage clients to carefully document all purchases of coins.

SPECIAL ISSUES – ART MADE OF OR INCLUDING IVORY, RHINOCEROS HORN AND MATERIALS FROM OTHER ENDANGERED SPECIES
In response to issuance of the National Strategy for Combatting Wildlife Trafficking by President Obama in July 2013[42], new federal policies on ivory and endangered species materials took effect in February 2014 that affect a very broad section of the art and antiques market, and cover many musical instruments, decorative arts and antiques as well as antiquities.[43] For many years, antique items made of ivory over 100 years old qualified for exceptions from customs and other US regulations having to do with interstate and international transportation and sale. An antique exception is also found under CITES, the Convention on International Trade in Endangered Species. These exceptions followed on the proposition that trade in antique objects made from ivory, coral, tortoise shell and other materials from endangered species had no effect on current poaching of animals in the wild.

In February 2014, the Department of Fish and Wildlife issued a new Director’s Order 210 Appendix 1 Guidance on the Antique Exception under the Endangered Species Act.[44] The Order dealt with the trade in any items, including antique and ancient items, made of materials that contain parts of endangered species, such as ivory. The regulations were based on the 2014 National Strategy for Combating Wildlife Trafficking.

The effect of the regulations is to create a near-total ban on commercial trade in African elephant ivory. There is already a complete ban on the trade of Asian elephant ivory. The Department of Fish and Wildlife has since modified the regulations and issued a substitute Questions and Answers statement on its website that explains the changes to the rules and the modification since issuance in February 2014.[45] The current rule includes a de minimus exemption that allows sale of items that are not made wholly of ivory but contain less than 200 gm. African elephant ivory, and providing the ivory was taken from the wild prior to 1976 and certain importation criteria are met.[46]

There is an antiques exemption for items 100 years old or older, that have not been modified with an Endangered Species Act species after December 27, 1973, and were imported under specific conditions through specific “antique ports” after 1982. [47] Although these regulations apply to American made objects, such as ivory-handled antique silver, canes, other antique objects with ivory decoration including antique guns, chess sets, or hundreds of other kinds of antiques, the Fish and Wildlife Service “as a matter of enforcement discretion” will not require compliance with the “antique port” element.

However, another federal law, the African Elephant Conservation Act of 1988 imposes a moratorium on import of worked ivory, other than personal effects, from any country unless that country has certified that such ivory was derived from legal sources.[48]

This above is not a complete summary of the current federal laws affecting trade and possession of artworks and antiques that are made of or include ivory. Practitioners dealing with collections that include ivory, coral, tortoise shell and other materials from endangered species should closely follow the regulatory process to ensure that their clients do not inadvertently violate the rules.

These 2014 restrictions have had the effect of stopping most of the trade in antique ivory, and antique dealer groups working to amend the regulations estimate that a billion dollars of these antiques have become worthless. The new regulations do allow importation of freshly killed “sport-hunted trophies.” The new regulations also concern Native American collectors and traders who handle antique traditional objects that contain decoration with coral, shell, marine mammal ivory and other protected species.

California law now bans the sale of nearly all ivory under California Fish and Game Code , section 2022.[49] The California ban includes marine mammal ivory as well, which is often used in antique and contemporary Native American and Native Alaskan ornaments and jewelry.

In 2014, New York and New Jersey enacted laws severely restricting sales of ivory within those states. The New York State law, effective August 12, 2014, bans intrastate sale, purchase, barter or distribution of ivory or rhinoceros horn articles, unless the transfer fits within an exception and a permit  is obtained from the New York State Department of Environmental Conservation. Permits are required even to display an ivory or rhinoceros horn object for sale. Permits are good for one year and buyers must keep a copy of the permit with the objects; ivory and horn sellers are also required to file a complete inventory list with the state. Intrastate sale within New York State may be authorized by permit for items that are at least 100 years old and contain less than 20% ivory or horn and have not been repaired after 12/27/1973, or are musical instruments made before 1975. Under the New York law, interstate sales of antique ivory are authorized when items are over 100 years old or have a Federal Endangered Species Act permit. Articles containing elephant ivory manufactured prior to 1976 or articles containing rhinoceros horn manufactured prior to 1970 may be donated to museums in-state or out-of-state. Practitioners should closely review the articles footnoted below. [50]

CONCLUSION
Planners serving clients with collections of antique and ancient art must take steps to identify potential problems and to mitigate risks by encouraging clients to undertake the best documentation possible, to research the objects’ history of import and prior ownership and to maintain detailed records over the long term.

Planners can also play an important role by researching current as well as prior foreign laws in effect at the time of the known or probable date of importation and by attempting to determine whether a foreign law exists, when it was enacted, and whether it constitutes a claim of national ownership or an export regulation. This kind of research may provide some comfort to an owner, an heir, or a donee institution regarding the content of source country laws, but given the paucity of case law and contradictory positions in the few cases on record, it is likely to provide little assurance as to how a US court might interpret them.

Prudence also demands that planners ask clients hard questions about the facts of acquisition. If there is any indication that a client’s collection may include smuggled objects or items from illicit excavation, further due diligence is warranted.

 

[1] The 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export or Transfer of ownership of Cultural Property was the first substantive international instrument specifically dealing with cultural property. The Convention specifically prohibited import of property stolen from “a museum or a religious or secular monument,” that is, from inventory. While the Convention extolled the benefits of international exchange of cultural property and recommended that State Parties establish permitting processes for export, it also envisioned cultural exchanges as between states or cultural institutions, not through the open market. The Convention also granted each signatory what critics have called a “blank check”; the ability to define what should be “protected” cultural property and what restraints to place on its transfer. The US implementing legislation, the 1983 Convention on Cultural Property Implementation Act, rejected the “blank check” approach and established a mechanism for review of foreign nations’ requests for US import restrictions and the enactment of agreements with foreign nations that balanced the need to deter looting with US museum, collector, and art dealer interests in the international circulation of cultural property. http://portal.unesco.org/en/ev.php-URL_ID=13039&URL_DO=DO_TOPIC&URL_SECTION=201.html

[2] The UNIDROIT Convention establishes conditions for restitution and return of stolen or illegally exported cultural objects between State Parties. It places the burden of proving good title on a current owner, whether that is an individual or institution, and requires compensation to a claimant unless the current owner can show due diligence in its acquisition. The UNIDROIT Convention grants a very lengthy time period for claims, generally between 50-75 years when there is a “theft.” The range and types of objects that may be claimed is very broad, covering claims under state ownership and claims made by members of a tribal or indigenous community for  objects of traditional or ritual use by that community

[3] AAMD Guidelines on the Acquisition of Archaeological Material and Ancient Art (revised January 29, 2013). https://aamd.org/sites/default/files/document/Guidelines%20on%20the%20Acquisition%20of%20Archaeological%20Material%20and%20Ancient%20Art%20revised%202013_0.pdf

[4]  This is not always bad news for fiduciaries, whose diligent attention to an artistic estate may be recognized by the courts, witness the recent $24.6 million awarded in August 2014 in Florida to three trustees of the Rauschenberg estate. The trustees had argued that a $51-55 million fee was reasonable. The Rauschenberg Foundation has filed a notice of appeal. In Re The Estate of Rauschenberg, Circuit Court of Florida, 20th Judicial Circuit (Lee County), File No. 08-CP-2479 (Aug. 15, 2014)

[5] 18 USC. § 2314.

[6] 19 USC. § 2601 et seq.

[7] 16 USC. 470(aa-mm).

[8]  See Native American Graves Protection and Repatriation Act of 1990 for restrictions on ownership or transfer. http://www.cr.nps.gov/nagpra/MANDATES/INDEX.HTM. In three decisions in 2013 and 2014, the Tribunal de Grande Instance de Paris has rejected efforts of the Hopi and Navajo tribes and nonprofit Survival International to halt Paris auctions of masks and other ritual objects deemed by the court to have been lawfully purchased by a French collector during his 30-year US residence. The items had never been reported as missing or stolen and were apparently purchased in good faith. The French court has consistently held that the plaintiffs lacked standing and the court jurisdiction over the matter, most recently sanctioning the nonprofit that joined the Hopi in the suit for raising the same arguments previously rejected by the court.

[9] Most nations have some form of laws on the books defining what is cultural property and placing limitations or restrictions on permanent export. The works of particular artists may be deemed the cultural property of a nation: Mexico today forbids the export of paintings by the artists Frieda Kahlo, Dr. Atl, and others.

[10] See, e.g., United States v. An Antique Platter of Gold, 991 F. Supp. 222 (S.D.N.Y. 1997), aff’d, 184 F3d 131 (2d Cir. 1999), cert. denied, 528 U.S. 1136 (2000).

[11] According to James McAndrew, former senior special agent US Customs, the response is often that there is no record of the object, but that the country would nonetheless like to claim it, often triggering seizure. Personal communication, McAndrew. Channah Farber Norman notes that Customs and Border Patrol also often contacts Interpol’s US National Central Bureau to see whether a claim has been made by a foreign country. Personal communication, Farber Norman.

[12] The Object Registry website states, “The Registry of New Acquisitions of Archaeological Material and Works of Ancient Art provides information on acquisitions of select works of archeological and ancient art by AAMD member museums since June 4, 2008, the date new AAMD Guidelines went into effect. These works are only those lacking complete provenance after November 1970, the date of the UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import and Export and Transfer of Ownership of Cultural Property. https://aamd.org/object-registry

[13] The author is personally aware of a half-dozen decisions by museums to reject donations in recent years based upon obviously erroneous readings of foreign export laws as national ownership laws or questionable interpretation of the terms of foreign law, or both, for example, rejection of a donation based on the automatic classification of any item used in any ceremonial as an “antiquity,” regardless of age, under a Nigerian export law.

[14] With narrow exceptions, ancient, Islamic, and ethnographic art is still among the least valuable art on the market and even important works of ancient art often have lower market values than works of a second-tier contemporary artists. While a very few ancient works of art are valued in the million dollar range, “collectible” authentic ancient coins, ceramics, textiles, and bronze artifacts are widely available for less than $100.

[15] For example, a 1961 Thai law, the Act on Ancient Monuments, Antiques, Objects of Art and National Museums, states that “buried, concealed, or abandoned” objects are “state property” and cannot legally be removed from Thailand without an official license. In 2008, US Federal prosecutors quoted a Thai government official statement that as far as he knew, Thailand had never issued an export permit under the law. Search Warrant on Written Affidavit at 5, United States v. Charles W. Bowers Museum Corporation, Docket No. 08-0093M (Jan. 19, 2008) Nonetheless, there are hundreds of thousands of ancient objects from Thailand on public sale in Thailand and in world circulation; Thailand has not enforced the 1961 law. Under McClain, a US court might hold Thai antiquities exported without a permit as stolen; absent the enforcement element under Schultz, Thai antiquities could be held not to be stolen. See Stephen K. Urice, Between Rocks and Hard Places: Unprovenanced Antiquities and the NSPA, 40 N.M. L. Rev. 123 (2010).

[16] Interpol maintains a free, Internet accessible database of stolen art at http://www.interpol.int/notice/search/woa.

[17] Symposium – Reform of U.S. Cultural Property Policy: Accountability, Transparency, and Legal Certainty, transcript of the proceedings, http://committeeforculturalpolicy.org/wp-content/uploads/2014/05/transcript3.pdf. See also White Paper: A Proposal to reform US Law and Policy Relating to the International Exchange of Cultural Property, Cardozo Arts & Entertainment Law Journal, Volume 32, Issue 2 (2014).

[18] International Foundation for Art Research (IFAR) Art Law and Cultural Property Database, www.ifar.org.

[19] UNESCO Database of Cultural Heritage Laws, http://www.unesco.org/culture/natlaws.

[20] White Paper: A Proposal to reform US Law and Policy Relating to the International Exchange of Cultural Property, Cardozo Arts & Entertainment Law Journal, Volume 32, Issue 2 (2014) 140-141.

[21] See 18 U.S.C. § 2315.

[22] An excellent resource designed for museums, the art trade, and the public, with checklists on how to buy with confidence, perform due diligence, deal with informal claims, and complete documentation on collections, albeit with emphasis on United Kingdom law, is the UK government website, Cultural Property Advice, http://www.culturalpropertyadvice.gov.uk.

[23] http://eca.state.gov/cultural-heritage-center/cultural-property-protection/bilateral-agreements

[24] Request from the Government of the Arab Republic of Egypt, Document Citation: 79 FR 21502, Page: 21502 -21503 (2 pages), Agency/Docket Number: Public Notice 8696, Document Number: 2014-08657, https://federalregister.gov/a/2014-08657.

[25] United States of America v. Mask of Ka-Nefer-Nefer, case: 4:11-cv-00504-HEA.

[26] The Art Museum Subdistrict of the Metropolitan Zoological Park and Museum District of the City of Saint Louis and the County of Saint Louis, case: 4:11-cv-00291-HEA, filed 2/15/11.

[27] Antiquities Minister says Egypt will not abandon its right to “Ka-nefer-nefer” mask http://sis.gov.eg/En/Templates/Articles/tmpArticleNews.aspx?ArtID=78360#.U59VpS9huIr

[28] US v. A 10th Century Cambodian Sandstone Sculpture, 12-cv-2600.

[29] See http://committeeforculturalpolicy.org/symposium-april-10-2014-reform-of-u-s-cultural-property-policy-accountability-transparency-and-legal-certainty/.

[30] The US Department of Homeland Security, Immigration and Customs Enforcement (ICE) publishes an online Fact Sheet with press releases on repatriations that include both smuggled items and seizures. Unfortunately, the Fact Sheet does not provide the legal reason for seizure other than, for example, “ICE determined that the items were legitimate pre-Columbian Peruvian artifacts and were not permitted to leave Peru.” (http://www.ice.gov/news/library/factsheets/cultural-artifacts.htm)

[31] This author was told by an Albuquerque, NM attorney handling a probate matter that in 2010, federal agents seized a collection of pre-Columbian materials from an estate in New Mexico, allegedly to determine whether the objects “needed to be returned” to the source country. No information was sought by the government from the attorney handling the probate regarding the country of origin, the date of entry or acquisition, or other information relevant to a determination that the objects had been imported in violation of US law, and the items were not returned to the estate. In another matter, an elderly collector in Los Angeles decided to sell items from Mail that she had purchased at a local flea market for $1500 many years before any agreement was established between the US and the Government of Mali. After she placed an advertisement on eBay, three Homeland Security agents arrived at her home. They brought a printout from eBay and a letter from the Ministry of Culture in Mali, and informed the collector that she could face unspecified federal charges if she failed to turn over the items to them immediately – she did as they asked.

[32] St. Hilaire has questioned the legal authority for seizures under the Cultural Property Implementation Act (CPIA) by Homeland Security Investigations (HIS) of Immigration and Customs Enforcement (ICE) including a seizure of Korean seals that had been found in a ditch by a Marine lieutenant in 1950. According to Hilaire’s widely read blog, the seizure took place based upon Korea being a signatory to the UNESCO treaty, although Korea is not and never has had an agreement under the CPIA. Korean Artifacts Seizure Prompts Question of Legal Authority, http://culturalheritagelawyer.blogspot.com/2013/11/korean-artifacts-seizure-prompts.html. See also: Egyptian Coffins Successfully Detected and Recovered by Customs in Texas – Question of Proper Seizure Authority Remains – Updated August 10, 2012, http://culturalheritagelawyer.blogspot.com/2012/07/egyptian-coffins-successfully-detected.html and Seizure of Mexican Figurine Prompts Question of CBP’s Legal Authority, http://culturalheritagelawyer.blogspot.com/2011/08/seizure-of-mexican-figurine-prompts.html.

[33] Ralph Blumenthal and Tom Mashberg, The Curse of the Outcast Artifact, New York Times, July 12, 2012, http://www.nytimes.com/2012/07/15/arts/design/antiquity-market-grapples-with-stricter-guidelines-for-gifts.html?pagewanted=all&_r=0.

[34] While many countries use MLATs occasionally for the purpose of obtaining information on the sale of cultural property, Peru does so routinely. An MLAT request from Peru generally seeks information from an auction house or art gallery selling antique Peruvian art via a letter delivered through a US law enforcement entity, often the local FBI office. The letter requests information on who owns or consigned items for auction, and seeks documentation of when and where the items were purchased. If the auction is pending, the letter asks the auction house to remove the items from sale and return them to the Government of Peru based upon Section 228 of the Peruvian Criminal Code, which provides that “Whoever destroys, alters, takes out of the country or markets property of the Cultural Pre-Hispanic Heritage of Peru or does not return such property in accordance with the authorization conferred, shall be punished by imprisonment for not less than 3 and not more than 8 years and a fine of 180 to 300 days…” If the letter is sent post-auction, it requests the names and contact information of the purchasers. If the auction house does not comply, a subpoena generally follows requiring the auction house’s custodian of records to appear and/or present certified copies of all records related to the sale of items “which relate to alleged violations of Section 228 of the Peruvian Criminal Code.” In the author’s experience, the letters and US federal inquiries do not address the reason why a provision in the Peruvian Code prohibiting marketing of antiquities in Peru is enforceable in the US against US auction houses.

[35] See  http://www.aam-us.org/resources/ethics-standards-and-best-practices/.

[36] See ICOM International Observatory on Illicit Traffic in Cultural Goods, http://obs-traffic.museum/due-diligence-good-faith.

[37] Report of the AAMD Task Force on the Acquisition of Archaeological Materials and Ancient Art (revised 2008), https://aamd.org/sites/default/files/document/Antiquities%20Guidelines%20with%20Intro%2006.08.pdf.

[38] There was increasing public awareness of museum acquisitions policies after Getty Museum curator Marion True faced criminal charges in Italy that she conspired with two dealers to receive illegally excavated antiquities. The charges expired in 2010 under the statute of limitations. True, Marion (2011), ‘Neither condemned nor vindicated’, Art Newspaper, (220). http://www.theartnewspaper.com/articles/Neither-condemned-nor-vindicated/22163

[39] A proposal that acknowledged that private collectors might reasonably have used a later date of the implementation of the UNESCO Convention in their nation (1983 in the US) as a guide for acquisition, and that museums could accept gifts of objects that entered the US up to that date was later dropped.

[40] See https://aamd.org/object-registry.

[41] Guidelines on the Acquisition of Archaeological Material and Ancient Art (revised 2013), https://aamd.org/sites/default/files/document/Guidelines%20on%20the%20Acquisition%20of%20Archaeological%20Material%20and%20Ancient%20Art%20revised%202013_0.pdf.

[42] http://www.whitehouse.gov/sites/default/files/docs/nationalstrategywildlifetrafficking.pdf

[43] http://www.fws.gov/policy/do210.html

[44] http://www.fws.gov/policy/do210A1.pdf

[45] http://www.fws.gov/international/travel-and-trade/ivory-ban-questions-and-answers.html

[46] https://www.fws.gov/international/travel-and-trade/de-minimis-exception.html

[47] https://www.fws.gov/international/travel-and-trade/ESA-antiques-exemption.html

[48] https://www.fws.gov/international/wildlife-without-borders/multinational-speicies-conservation-acts-african-elephant.html

[49] https://cdfgnews.wordpress.com/2016/07/01/california-ivory-ban-now-in-effect/

[50] Environmental Conservation Law (ECL) §11-0535-a, enacted by Chapter 326 of the Laws of 2014. For additional information: Department of Environmental Conservation Guidance: http://www.dec.ny.gov/permits/99792.html , FAQs: http://www.dec.ny.gov/docs/wildlife_pdf/ivoryfaqs.pdf , Sale of Elephant and Mammoth Ivory or Rhinoceros Horn Permit Application, http://www.dec.ny.gov/docs/wildlife_pdf/ivoryap2014.pdf , Sale of Elephant and Mammoth Ivory or Rhinoceros Horn Inventory List, http://www.dec.ny.gov/docs/wildlife_pdf/ivoryinventorylist.pdf Read More

Art collectors, art creators, legal and financial planners, executors and trustees should all have familiarity with the basic rules for appraising art, especially for charitable donation. An appraisal is used to determine the Fair Market Value (FMV) of an item for donation. FMV is defined by the IRS as the price that would be agreed on between a willing buyer and a willing seller on the open market, with neither being required to act, and both having reasonable knowledge of the facts.

Ethical and performance standards, appraiser qualifications, and guidance regarding valuation methods and techniques are established by The Appraisal Foundation (TAF). This organization was established in 1987 in order to implement the Uniform Standards of Professional Appraisal Practice, or USPAP.

Contributions of art objects and other personal property are reported on IRS Form 8283, Noncash Charitable Contributions, Section A, for all contributions for the year over $500.

For deductions of art objects and other personal property over $5,000, Form 8283 Section B must be completed. This is signed by the donor, the donee, and the appraiser. The $5,000 amount applies to both a single item of property valued over $5,000 or to the aggregated value of similar items of property donated during a calendar year, whether the items are donated to one or multiple donees. Thus, a gift of similar items such as books or stamps to multiple charitable recipients will be aggregated together, and if the total is over $5,000, the donated value must be substantiated. The donor should also obtain a separate qualified written appraisal of the donated property from a qualified appraiser.

For deductions of art objects and other personal property over $20,000, the same procedure must be followed, but the appraisal must be attached to Form 8283 when it is submitted to the IRS.

The weight given an appraisal depends on the completeness of the report, the qualifications of the appraiser, and the appraiser’s demonstrated knowledge of the donated property. An appraisal must give all the facts on which to base an intelligent judgment of the value of the property.

Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5000, the deduction should be supported by a qualified appraisal made by a qualified appraiser, and you must attach Schedule B of form 8283 to the tax return. The phrase “similar items” means property of the same generic category or type (whether or not donated to the same donee), such as stamp collections, coin collections, lithographs, paintings, photographs, books, nonpublicly traded stock, nonpublicly traded securities other than nonpublicly traded stock, land, buildings, clothing, jewelry, furniture, electronic equipment, household appliances, toys, everyday kitchenware, china, crystal, or silver.

Appraisals should describe the individual items being appraised unless the item consists of a set, such as a set of dishes or elements of a complete costume. For items of very minor value, an appraiser can provide a group description for items totaling less than $100. (IRS Pub. 561 (2007) Determining the Value of Donated Property.)

APPRAISER REQUIREMENTS

Section 1219 of the Pension Protection Act of 2006 imposed new requirements for what constitutes a “qualified appraisal” by a “qualified appraiser” for a gift of non-cash property worth more than $5,000. (The Pension Protection Act of 2006 (P.L. 109-280))

The appraiser should have earned an appraisal designation from a recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised OR meet certain minimum education and experience requirements:

1. The individual must regularly perform appraisals for which the appraiser receives compensation.
2. The individual must demonstrate verifiable education and experience in valuing the type of property being appraised. To do this, the appraiser can make a declaration in the appraisal that, because of his or her background, experience, education and membership in professional associations, he or she is qualified to make appraisals of the type of property being valued.
3. The individual has not been prohibited from practicing before the IRS under 31 USC §330(c) at any time during the past three-year period ending on the date of the appraisal.
4. The individual is not a donor or done, party to a transaction in which the property was acquired, an employee, married to or related to another party, and other conflict of interest-based exclusions.
5. The appraiser must sign the qualified appraisal and Form 8283, Noncash Charitable Contributions, Section B, Part III.

The Court is not bound by the opinion of any expert witness, including an appraiser.

APPRAISAL REQUIREMENTS

The appraisal should provide a complete description of the item of art, including, if known:

(a) the name of the artist or culture;

(b) the title or subject matter;

(c) the medium, such as oil on canvas, or watercolor on paper;

(d) the date created;

(e) the size;

(f) any marks, signatures, or labels on the item of art, on the back of the item of art, or affixed to the frame;

(g) the history (provenance) of the item, including proof of authenticity, if such information is available;

(h) a record of any exhibitions at which the item was displayed;

(i) any reference source citing the item; and

(j) the physical condition of the item.

A Self-Contained Appraisal Report is the typical format used for appraisals submitted to the IRS.

The content of a Self-Contained Appraisal Report for personal property must be consistent with the intended use of the appraisal and, at a minimum state the identity of the client and any intended users, by name or type; state the intended use of the appraisal; sufficiently identify the property involved in the appraisal, including the physical and economic property characteristics relevant to the assignment; state the property interest appraised; state the type and definition of value; state the effective date of the appraisal and the report; describe the scope of work used to develop the appraisal; describe the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained; state the use of the property on the date of value; and, when an opinion of the appropriate market was developed by the appraiser, describe the rationale for that opinion; clearly and conspicuously: state all extraordinary assumptions and hypothetical conditions; and state that their use might have affected the assignment results; and include a signed certification.

Each written personal property appraisal report should contain a signed certification that is similar in content to the following form:

• I certify that, to the best of my knowledge and belief:
• The statements of fact contained in this report arc true and correct.
• The reported analyses, opinions, and conclusions arc limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.
• I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved.
• I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
• My engagement in this assignment was not contingent upon developing or reporting predetermined results.
• My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
• My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.
• I have (or have not) made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.
• No one provided significant personal property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual must be stated.)

PENALTIES FOR SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS

The donor may be liable for a penalty of 20% of the underpayment of tax related to an overstatement of value of donated property if the value or adjusted basis on the return is 150% or more of the correct amount and the donor underpaid his tax by more than $5000 because of the overstatement. There is a 40% penalty if the difference is 200% or more and the donor underpaid by more than $5000. (And vice versa for understatement on estate and gift tax.)

Section 1219 of the Pension Protection Act of 2006 added IRC 6695A, Substantial and Gross Valuation Misstatements Attributable to Incorrect Appraisals. This new penalty provision allows the IRS to assert a penalty against any person who prepared an appraisal of the value of property and who knew, or reasonably should have known, the appraisal would be used in connection with a return or claim for refund and that appraisal results in a substantial valuation misstatement (within the meaning of IRC 6662(e)), a substantial estate or gift tax valuation understatement (within the meaning of IRC 6662(g)), or a gross valuation misstatement (within the meaning of IRC 6662(h)) with respect to such property. (IRS Manual 201.1.12.1) The penalty imposed would equal the lesser of 10 percent of underpayment of tax resulting from the appraisal or 125 percent of the gross income received by the professional to prepare the report. Under prior law, appraisers could be barred from practice before the Department of the Treasury or the IRS after notice and a hearing if they had been assessed a penalty for aiding in an understatement; now the requirement that a penalty be assessed is no longer required before an appraiser can be barred from practice.

FRACTIONAL INTERESTS

The Pension Protection Act created new limitations on the donation of fractional interests after August 17, 2006. (26 CFR 1.170 (f)(3))

Once a fractional gift is made, the value of any subsequent gifts is now limited to the lesser of the initial fair market value of the contribution or the later fair market value of the contribution. The gift must be completed within the earlier of 10 years or the death of the taxpayer. Since a charitable donation may be spread over 5 years, it would not make sense to donate less than a 50% interest. The donee institution must take substantial physical possession or make use of the property during the time represented by the fractional interest, i.e. a 50% interest gift means the institution must possess the item for ½ the year. If any of these conditions are not met, then the deduction previously taken by the taxpayer will be recaptured with interest at 10 percent.

CHARITABLE BARGAIN SALES

A bargain sale of personal property to a qualified charitable organization (a sale or exchange for less than the property’s fair market value) is partly a charitable contribution and partly a sale or exchange. This scenario can be particularly advantageous to an artist’s estate both through the charitable deduction and by enhancing the artist’s reputation (and the value of his remaining work) because of the presence of the artist’s work in museum collections. With the bargain sale, the client sells his or her art object or collection to the charitable organization at less than fair market value. The transaction gives your client cash, plus a charitable income tax deduction for the discount your client took from the market value.

FILING REQUIREMENTS

An appraisal, which is reported in an appraisal summary (Form 8283), must be made within a narrow time frame, no earlier than 60 days prior to the date of gift or no later than the due date, including extensions, of the tax return on which a charitable deduction is first claimed. Unless the appraisal is completed and Form 8283 is filed timely, the charitable deduction is lost.

DONEE INFORMATION RETURNS 8282

Donee organizations must use Form 8282 to report information to the IRS and donors about dispositions of certain charitable deduction property. Original and successor donee organizations must file Form 8282 if they sell, exchange, consume, or otherwise dispose of (with or without consideration) charitable deduction property (or any portion) within 3 years after the date the original donee received the property.

The organization does not have to file Form 8282 if the item sold was valued at less than $500.

A $10,000 penalty may apply to any person who identifies in Part III tangible personal property the organization sold, exchanged, or otherwise disposed of, as having a use that is related to a purpose or function knowing that such property was not intended for such a use.

IRS ART APPRAISAL SERVICES

Art Appraisal Services (AAS) provides advice and assistance to the Service, other Government agencies, and taxpayers on valuation questions arising in connection with personal property and works of art. It also assists the Office of Chief Counsel and Department of Justice (DOJ) in the development of cases involving valuation issues for trial or pretrial settlement. At the request of the donor, the IRS will issue a Statement of Value that can be relied on by the donor of the object of art. This helps the donor in avoiding penalties. If your client is considering donating an object of art that has been appraised at $50,000 or more, you can recommend that he or she request a Statement of Value for that object from the IRS. (Internal Revenue Manual 8.18.1.1 (2012))

The donor must request the Statement of Value after the donor’s donation but before filing the tax return that reports the donation. The request must include a copy of the qualified appraisal of the artwork(s), the completed Form 8283 including Section B, and the $2,500 fee. (This fee is for one to three items, add $250 for each additional item over three.)

IRS REVIEW

Art Appraisal Services (AAS) provides appraisal service on works of art including paintings, drawings, prints, sculptures, antiques, ceramics, decorative arts, textiles, carpets, silver, rare manuscripts, antiquities, ethnographic art, collectibles, classic automobiles, and historical memorabilia. If a Service employee has a case that involves a taxpayer’s appraisal of a single work of art with a claimed value of $50,000 or more, it must be referred to AAS for review and, subject to the discretion of AAS, may also be submitted for additional review by the Commissioner’s Art Advisory Panel. (Internal Revenue Manual 8.18.1.11 (2012)) A detailed description of the review and appraisal analysis process may be found at http://www.irs.gov/irm/part8/irm_08-018-001.html#d0e243. An AAS appraiser will review the complete referral file (request for valuation assistance with the essential information and material identified above) and conduct additional research as needed before referral to the Art Advisory Panel or an outside appraiser.

IRS ART ADVISORY PANEL

The Commissioner of the IRS maintains an Art Advisory Panel (the Panel) of nationally prominent art museum directors, curators, and art dealers to help review and evaluate appraisals submitted by taxpayers in support of the fair market value claimed for works of art on income, estate, and gift tax returns. The Art Advisory Panel meets three to four times per year to review valuations on paintings, sculpture, and decorative art and antiques. The Panel may question the taxpayer’s claimed value by substantiating and recommending a specific valuation. Such recommendations are submitted to AAS and may become the position of the IRS. Later, if agreement is not secured with a taxpayer, employees may contact AAS to get additional information and valuation data in support of the Service’s determined value. This is accomplished by requesting a reconsideration of the values through the SRS. (See IRM 8.18.1.9, Reconsideration and Dispute Procedures.)

The proportions of accepted and challenged appraisals is fairly consistent over time. The AAS adopted in full 96.5% of the Art Advisory Panel’s recommendations during fiscal year 2012; it adopted the rest in part. During fiscal year 2012, the Panel completed its review of 444 items with an aggregate taxpayer valuation of $281,859,200 on 43 taxpayer cases under audit. The average claimed value of a charitable contribution item was $613,684; the average claimed value for an estate and gift item was $626,890. The Panel recommended accepting 51% and adjustments to 49% of the appraisals it reviewed. Two percent of the appraisals reviewed require additional staff development before the Panel can make a value recommendation. The Panel recommended total net adjustments of $66,066,800. On the adjusted items, the Panel recommended a net 52% reduction on the charitable contribution appraisals and a net 47% increase on items in estate and gift appraisals.

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Documentation during life is inestimable value in managing a collector’s estate or artist’s legacy. Creators and collectors should have a complete and up-to-date running inventory of each of their works, including when it was first copyrighted – that is, created and fixed in a tangible medium. Every artist should have an inventory of the works of art in his or her home, studio, and of the works on exhibition or in a gallery elsewhere.

Photographs can do much to document a collection in situ or an artist’s studio. While these locations and their contents should be documented periodically during life, it is even more important to take photographs after death, but before disturbing the collecting environment or studio. In the event that the collection or artist’s works are accepted for donation, these photographs will be of value for publication, exhibition, and the maintenance of an archive.

If possible, the artist’s inventory should include:
• a good digital photograph
• the medium, dimensions, title and description, and the mark or other signature
• signed copies of all agreements of sale, loan agreements, deeds of gift, publishing contracts, grants of rights to others to prepare derivative works or reproductions
• if produced in a limited edition, how many copies were produced and whether the plate or cast was destroyed
• records of all copyright registrations, deposits, notices and whether the work was created as a joint work, a work for hire, or a derivative work
• licenses, grants, and gifts
• exercises of termination rights and any other contractual rights

In addition to the records above, a collector’s inventory might include:
• the name of the seller, the date and place of the purchase, and the cost
• all information regarding provenance and/or prior ownership
• when and where the work has been exhibited
• insurance records
• if stolen, the circumstances of the theft

Gifts (particularly gifts of works of art) should always be documented by deeds of gift to avoid fraudulent postmortem claims by purported recipients. For artists, the inventory should record the expenses incurred in the production of each work to determine tax basis.

A sample inventory/catalog worksheet may include:
REF#:
TITLE:
DATE:
MEDIUM:
SIZE:
SIGNATURE:
INSCRIPTION:
GALLERY REF:
PUBLICATIONS:
EXHIBITIONS:
COPYRIGHT DATE:
INSURANCE VALUATION:
DATE ACQUIRED:
HOW ACQUIRED (PURCHASE/GIFT):
SOURCE:
PROVENANCE:
OTHER COSTS IN PRODICTION OR ACQUISITION:
(IMAGE OR DIGITAL FILE NAME)

CREATING AN INVENTORY/CATALOG WORKSHEET

An Excel worksheet is the simplest and most widely available inventory form.

1. Use a numbering system and tag the item! Many artwork descriptions are virtually identical as to title, medium, or size; the assigned number enables identification. The same numbers should be used to identify photographs, digital files and other documentation relating to each piece.
   2. Title: It is best to use quotation marks to distinguish an actual title from the same words used as comments or descriptions (e.g., “untitled” versus untitled).
   3. Date: Even if the actual date is unknown, indicate a range or guess.
   4. Medium: Generalizations (painting, drawing, etc.) should be avoided in favor of specifics such as “oil on canvas.”
   5. Size: It is standard to list height x width x depth in that order.
   6. Location: This should be as specific as possible and should be kept current by noting changes. It is helpful to add a “SHIPMENT” or “IN/OUT” column to indicate both temporary changes such as loans, and permanent changes such as sales and gifts.
   7. Signature: It is important to record if and where each work is signed.

Even partial documentation can be enormously helpful. It is better to have something than nothing at all. Read More