Ars longs, vita brevis. Art is immortal, artists are mortal. Taxes impinge on every part of the art world and are a concern for both artists and collectors. Planning for and administering estates of artists and owners of art collections raises unique business management, income tax, transfer tax, and estate planning issues. Such planning often requires an interdisciplinary approach that addresses copyright law, tax and estate planning (including, but not limited to, charitable giving), business management, and knowledge of the valuation of a creative work. Substantial changes were made to the Federal estate, gift and generation-skipping transfer taxes by The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "2010 Act").

As a preliminary matter, it is essential to understand that the changes made by the 2010 Act will only apply for two years – for 2011 and 2012 only. Unless Congress acts to make these changes permanent (or extends them even further), we will once again face the prospect of reverting back to the transfer tax laws that applied in 2001. Nevertheless, it is necessary to understand the new transfer tax laws and plan accordingly. Further, other matters covered by the 2010 Act – such as the extension of the "Bush income tax rates" – are not covered by this Alert.