The passing of Miami’s beloved top art patron, collector, and founder of the Rosa de La Cruz Collection sent shockwaves through the art world at the end of last February.

The sad announcement quickly was over-shadowed by the shock of the news that her cutting-edge museum collection abruptly closed, along with plans for a portion of the artworks to be consigned by Christie’s, where they finally went under the hammer in a series of sales that kicked off the evening of May 14th, in New York City.

The collection was announced it would be auctioned at an estimated $30 million (and of this publication was said to have sold for $34M). It is estimated to be way below the potential profit from the sale of upward of 1000 works from artists the likes of Ana Mendieta, Albert Oehlen, Felix Gonzalez-Torres, Glenn Ligon, Mark Grotjahn, Martin Kippenberger, Peter Doig, and Wade Guyton, amassed by Rosa and her husband Carlos de La Cruz over their lifetime together as keen and avid patrons of the arts.

To many of us who saw the collection grow from an open house invite-only to the beautiful 30,000- square-foot building helping to pioneer the gentrification of the Design District in 2009, there is a certain dismay.
And I question was this the only option available for this significant body of work? Miami will not be the same without this cultural heritage, leaving a vacuum, as the collection is disbanded.

In an interview in theMiami Herald, her husband of 60 years explained that there is a practical reason why the family chose to close the museum and sell the collection. The couple have five children, 17 grandchildren and six great-grandchildren. The taxes for the collection as well as maintaining the museum building is costly and, he said: shouldn’t be put on the next generations.

Rosa herself had replied to a query by the New York Times back in 2009, when she first opened her collection to the public, whether she would ever sell, saying, “Every collector needs to realize you can’t take it with you. The works will either go to an institution, which might not be able to show them; to your kids, who might not want them; or to an auction house.”

It turns out the latter will be the result of all those decades building what would have been her lifetime of legacy and Miami loses its cultural stock as all those pieces leave never to return. But that is an entirely other topic.

The De La Cruz family knows all too well, navigating the dynamic currents of the art market requires astute planning. All the more so for those who look to safeguard one’s art collection legacy for the future generations.

The recent Art Basel and UBS Global Art Market Report revealed both promise and peril in the art market’s trajectory, signaling a need for art collectors and estate planners to tread carefully.

Art collections, with their unique blend of cultural import and investment potential, present a challenge in estate planning. The volatility inherent in art values can complicate matters, potentially exposing estates to tax liabilities and distribution dilemmas.

To address these concerns, savvy collectors are turning to sophisticated estate freeze techniques. Family Limited Partnerships (FLP) and Limited Liability Companies (LLC) offer a structured approach to managing art collections. By transferring ownership to these entities, collectors can gift or sell shares to heirs, effectively freezing the estate value while maintaining control and enjoying tax advantages.

Grantor Retained Annuity Trusts (GRAT) provide another avenue for freezing estate values. By transferring art to a trust while retaining the right to an annuity, collectors can pass on appreciation tax-free to beneficiaries, shielding the estate from market fluctuations.

A GRAT entails transferring art to a trust, with the collector retaining the right to receive an annuity for a set duration. Any appreciation beyond the IRS- approved interest rate is then passed to beneficiaries tax-free, effectively freezing the estate value of the art at the time of transfer.

By locking in current market values and controlling the handling of collections after their passing, collectors can safeguard against the need to sell pieces in an unfavorable market.

By employing these estate freeze strategies, collectors can not only shield their estates from market volatility but also realize their legacy goals, preserving collections within the family or supporting cultural institutions.

The Collection was located at 23 NE 41st Street, Miami, Florida and was open to the public free of charge. (photo from Rosa de la Cruz Collection)