Can you Trust your Art Trust?
When artists (or collectors) are planning their estate the issue of whether artwork should be placed in a trust should be considered. Like any strategy, art trusts have costs and benefits and it is ultimately up to the client to determine if they are worth it. I like to focus on what client’s goal is. Do you just not want the artwork to be thrown away? Donating it to a hospice or non-profit which will put artwork on display may be a more economical solution to having a trust pay to have it stored and never be seen.
If an artist (or collector) has determined that the benefits of an art trust outweigh the costs, there are several things that need to be considered in order to ensure a trust will actually serve its intended purpose.
Waiver of Trustee’s Duty to Diversify Investments
Most states have adopted some form of the Uniform Prudent Investor Act. This act requires trustees (absent a waiver in the trust) shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying.
While it possible for a trustee of an art trust to argue holding the work better serves the purpose of the trust, not having a waiver of the requirement to diversify investments certainly puts them on a back foot. Presumably, the artist (or collector) chose the trustee because they trust them and want them to succeed. Waiving the requirement that investments are diversified and specify exactly what they want the trustee to do with their work (hold, sell, license, loan) will help them succeed.
Waiver of Trustee’s Duty to Monitor Investment Performance of Personal Property or Illiquid Assets
The Uniform Prudent Investor Act requires trustees to manage trust assets as a prudent investor would and requires them to consider, general economic conditions, and take reasonable steps to verify facts relevant to the investment and management of trust assets. Trustees can arguably violate these provisions if artwork is held in trust and they cannot substantiate how they monitored investment performance of the artwork. Artwork is not like a stock traded on an open exchange. It is close to impossible to substantiate it’s economic performance or a short length of time. Thus, it is important to excuse a trustee from any obligation of trying monitored investment performance of something that they will not be able to do.Allow the Trust to hold artwork and real property in an LLC
Most states have some form of the rule against perpetuities which limits the amount of time a trust can administer real or personal property. In some states the rule is the trust property must vest or the trust will terminate 90 years after its creation or within 21 years of the death of the youngest beneficiary alive when the trust was created. If an artist (or collector) wishes for the trust to control the artwork for the longest period of time, it might be in their interest to setup and LLC to hold the artwork and have the trust own shares in the LLC. Allowing the LLC to hold the property fits an exception to the rule against perpetuities most states have for non-donative transfers which essentially characterizes it as a business transaction.
Some states even have specific drafting requirements for these types of trusts which are referred to as “dynasty trusts”.
Can Artists Retire?
Like anyone, Artists should be able to retire and be able to enjoy a period of life where they don’t have to work. Artists are able to retire if they make more than enough money to survive in order to save money in retirement plan over a long period of time.
There are many options available to artists (and all people who are self-employed) to prepare for retirement . The first type of plan that artists should consider when planning for retirement is a solo 401K. This is similar to the type of 401K plans traditional employees can contribute to, but they provide the benefit to of allowing contributions to it as both an employee and an employer. For 2026, an artist can contribute 100% of their earned income up to $24,500 as an employee and up to 25% of their compensation as an employer (if they under 50). Artists cannot have any W-2 employees (aside from your spouse) to have a solo 401K. If an artist takes on a W2 employee, the solo 401K must covert to a traditional 401k.
Another type of account that artists should consider when planning for retirement is a simplified employee pension IRA (SEP IRA). A SEP IRA is similar to solo 401K, however, artists are only able to contribute to them as employers. For 2026, artists can contribute the lesser of 25% of their compensation or $72,000. SEP IRAs allow artists to have employees, but the artists will have to contribute the same amount to their employee’s account as their own.
Another type of account that artists should consider when planning for retirement is a savings incentive match plan for employees (SIMPLE IRAs). A SIMPLE IRA is simple to a SEP IRA, but has different contribution rules. Artists can defer up to $17,000 of their salary in 2026 as employees subject to cost of living adjustments. As an employer, they are required to make a contribution every year. The contribution must match employee contributions dollar-for-dollar up to 3% of their compensation (or 4% under new SECURE 2.0 rules for some employers), or make a flat 2% contribution to all eligible employees regardless of whether employees contribute.
Lastly, many states (and few cities) have state-administered retirement savings programs that artists (and any self-employed person) is eligible to join.
Estate Planning for Artists
Tuesday May 5th at 11 am, I will be hosting a virtual estate planning session for Artists on behalf of Washington Area Lawyers for the Arts.
Awesome-Con Art Law Panel
On March 15th, I co-hosted a panel on art law at Awesome-Con in Washington DC with Emily Sexton of Sexton Law. We discussed the very basics of copyright, trademark, and contract law. How arts can organize their businesses and the latest decisions in generative AI law were discussed. We had around great turn out and we are looking forward to presenting next year.
Ink, Images, and the Intrinsic Test: What the Kat Von D Ruling Means for Artists
New year, new art law decisions. Last year, Jeffrey Sedlik (a photographer) sued Kat Von D for copyright infringement for copying his photograph in making a tattoo. The Sedlik lost at the district court level and he appealed the 9th Circuit which recently issued a decision with Sedlik v. Von Drachenberg, No. 24-3367, 2026 WL (9th Cir. Jan. 2, 2026).
The issue on appeal was whether Sedlik was entitled to summary judgment and judgment as a matter of law on the issue of substantial similarity. The Court explained the test for substantial similarity is a two-part test. The first part "assesses the objective similarities of the two works, focusing only on the protectable elements of the plaintiff's expression." The second part "test[s] for similarity of expression from the standpoint of the ordinary reasonable observer, with no expert assistance."
The court emphasized that the intrinsic test is reserved for the finder of fact, while the extrinsic test may, when appropriate, be determined as a matter of law at an earlier stage of litigation. see Funky Films, Inc. v. Time Warner Ent. Co., 462 F.3d 1072, 1076-77 (9th Cir. 2006), overruled on other grounds by Skidmore, 952 F.3d 1051. Both tests must be satisfied for the works to be deemed substantially similar.
The Court affirmed the denial of Sedlik’s motion for summary judgment reasoning that the first part of the substantial similarity test was not a purely legal question. The court also affirmed the denial of Sedlik’s motion for summary judgment reasoning the application of the first part of the test was a triable issue for the jury and reversing it would be tantamount to "supplanting the jury's subjective interpretation with [our] own,"
What should artists take away from this decision? Mainly, that anything can happen at the trial level. The same set of facts could absolutely produce a different result in another jurisdiction. Second, since copyright case as highly fact specific, it unlikely that decisions on key issues (like substantial similarity or fair use) would be reversed on appeal.