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Boston, MA
Leading Advisor
Karla D’Alleva Valas, Vice President and Managing Director,
Complex Asset Group
I look forward to discussing how to maximize your
philanthropic gift. I can be reached at 800.682.4438.
MAKE
—Karla D’Alleva Valas
M Y HO B BIES AR E. . .
Any activities with family:
watching my children play,
laugh, learn and grow
By Karla D’Alleva Valas
donation involving alternative assets,
it is critical to understand overall personal, financial and charitable goals.
The key advantages of art donations
can be summarized succinctly, and
they are essentially the same as those
for donating other complex assets:
• An immediate tax deduction occurs
• Elimination of capital gains tax on the
appreciated asset(s) becomes possible
• The asset(s) can be removed from
the portfolio, for those looking to simplify their estate
The basics are simple, but careful consideration of the following
questions is warranted. Has the art
appreciated in value and what is the
current fair market value? What is the
cost basis? Is an appraisal required?
Will heirs appreciate a gift of art or will
they sell immediately, and what are
their tax consequences?
Perhaps the most important question for determining tax treatment
is whether the recipient public charity meets the “related use” rule, which
requires that the charity use the
donated art in furtherance of the mission
that forms the basis of its tax-exempt
status. If the art is donated to a public
charity that does not use the art in
accordance with its stated mission, the
donor may be limited to a deduction of
the lesser of the cost basis or the fair
market value.
Some charitable organizations
besides museums and art institutions,
like hospitals and schools, may be able
to use the donated art in their mission
and, therefore, a fair market value tax
deduction may be available. Most other
charities will likely sell the donated art
promptly and employ the funds in their
core (non-arts-related) mission.
Finally, some high net worth individuals may want their art donation
to benefit multiple charitable organizations. If they are willing to accept
a potentially lower charitable tax
deduction, donating the art to a public
charity with a donor-advised fund
program will allow them to recommend
grants to many different charities, with
the potential of creating a lasting and
diversified charitable legacy.
The donation of complex assets,
including art, can provide strategic
tax-advantaged solutions and other
benefits. Many individuals may prefer
to keep their liquid assets invested
while parting with their illiquid,
higher-maintenance holdings. Do
not overlook the art in a total wealth
portfolio—such assets can be used for
other “emotional” pleasures, like giving
to charity.
Fidelity Charitable is the brand name for Fidelity® Charitable Gift Fund, an independent public charity with a donor-advised fund program. Various Fidelity
companies provide services to Fidelity Charitable. 624179.1.0
THE M O ST I NF L U E NTI A L
P E R SO N I N M Y L I F E . . .
My mother. She set expectations
high and instilled a strong work
ethic. She is my leading advisor.
W HA T I ’M R EADING NO W …
Steve Jobs by Walter Isaacson
About Karla D’Alleva Valas
Karla D’Alleva Valas is a vice president and managing director of the Complex Asset Group for Fidelity
Charitable®, a leader in providing charitable solutions to financial advisors and their clients, helping them
to achieve their philanthropic goals. Previously, she served as a vice president and chief compliance officer,
providing integrated tax and compliance support to Fidelity Charitable® in the tax-exempt, donor-advised
fund market. Ms. Valas earned a BA degree in chemistry and sociology from Mount Holyoke College and a
JD degree from the New England School of Law. She also earned a master of laws in taxation degree from
Boston University School of Law.
Professional Experience
15 years
I L L U S T R AT I O N B Y N A N C Y J A N U Z Z I
The charitable donation of complex
assets—meaning privately held,
illiquid assets like private stock,
limited partnership interests or real
estate, among other things—is increasingly popular. And while art may not
typically come to mind in terms of a
portfolio of such assets, under the right
circumstances, a fine art donation to
charity can be a viable and attractive
option for many investors.
According to the Barclays June
2012 Wealth Insights Report, “Profit
or Pleasure? Exploring the Motivations Behind Treasure Trends,” high
net worth individuals in the U.S. and
abroad devote an average of 10 percent
of their total net worth to nonfinancial
assets like art and collectibles. Art is
a “treasure asset”—a personal expression of the owner, with an emotional
component attached. As such, many
individuals may have trouble parting
with a beloved piece (or pieces) of art,
and some may wish to donate the art
only to an arts charity, like a museum.
More and more, however, art and
other treasure assets are being
employed for charitable giving outside of the arts sector. Donating art
to charities without an art mission is
of course possible; however, specific
rules apply, and as with any charitable
FI D E L I TY CHA RI TA B L E ®
Art: Should I hold it, bequeath
it or donate it?
How to reach Karla D’Alleva Valas
GROW
Fidelity Charitable®
LIVE
“If the art is donated to
a public charity that
does not use the art
in accordance with
its stated mission, the
donor may be limited to
a deduction of the lesser
of the cost basis or the
fair market value.”
Bar Admissions
New York State;
Commonwealth of Massachusetts
Education
LL.M., Taxation, Boston University School of Law; JD, New England School
of Law; BA, Mount Holyoke College
Email
[email protected]
Website
www.FidelityCharitable.org
Fidelity Charitable®
Professional Services Provided
Ms. D’Alleva Valas works with Fidelity Charitable® donors and their
tax, legal, investment and philanthropic advisors to facilitate charitable
donations, including donations of non-publicly traded assets with varying
levels of complexity.
Association Memberships
American Bar Association
200 Seaport Boulevard, Boston, MA 02210
800.682.4438
WORTH.COM
OCTOBER-NOVEMBER 2012
113
W
Karla D’Alleva Valas
Vice President and Managing Director
Complex Asset Group
Fidelity Charitable®
200 Seaport Boulevard
Boston, MA 02210
Tel. 800.682.4438
[email protected]
www.FidelityCharitable.org
REPRINTED FROM
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the evolution of financial intelligence
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