Over the next quarter century, nearly $73 trillion will be transferred from America’s boomer generation to Gen X and its millennial children in what is being called the “Great Wealth Transfer.” About half of this figure goes to the top 1.5% of households, aka, America’s working class.

That complicated Sarah McDaniel’s career to no end.

As head of Morgan Stanley’s art resources group, McDaniel helps high-net-worth clients manage their art collections, but aging collectors are reassessing their plans for who will inherit their art amid a fast-growing art market and changing tastes. Generation.

“What we’ve found is that with the great transfer of wealth and the economy of taste in the art market, the children of many collectors don’t have the same taste in art as their parents,” McDaniel said. ARTnews In a recent interview. “Due to past collection categories and who is collecting over a longer period of time, the relationship can be reduced when a collector passes on or removes their collection.”

McDaniel estimates that for its ultra-high-net-worth clients, whose net worth totals $30 million or more, five to ten percent of their balances are in art and collections, meaning trillions of works of art are expected to change hands in the coming decades. . Or so estate planners like McDaniels thought.

But when heirs don’t want their parents’ collection, the two best options for collectors are to either give the works away for a big tax break or sell the art while the collector is still alive, McDaniel says. This doesn’t just mean selling the job as an end-of-life plan, but selling a lot of work throughout life.

Ability to realize added value through relationships [collectors have in the market] And the value of the art you collect may be better than waiting to sell unwanted works of art decades later when the collector buys them,” McDaniel said.

The ever-changing trends in art taste and the volatility of the art market may seem disturbing, but McDaniel points out that there are many positive factors contributing to this ever-changing cycle of trends.

‘There is a new generation of collectors interested in acquiring the art of their peers,’ says McDaniel. “The collectors are more female and internationally diverse, now there are many more Asian collectors.”

Auction houses such as Sotheby’s have had a big advantage in the past, according to McDaniel, and these new collectors often want to buy from young, vibrant artists from diverse backgrounds. In the year In November 2021, Sotheby’s held its first evening sale dedicated to living artists. The sale of “Now” was a huge success, especially for female artists like Simone Leigh, Anna Weyant and Jennifer Packer who fetched high prices that night. The sale brought in a total of $283.4 million.

“Typically, it takes some time for living artists to have a secondary market. For some living artists, we’ve seen an acceleration or deceleration of the primary and secondary markets,” McDaniel said. “They may be selling through both channels at the same time.”

This fast-moving market is subject to great volatility for young artists, who often rise and fall quickly, with little seen from the success of their work on the secondary market.

So how are McDaniels customers reacting to the fact that the collections they have spent decades collecting may be unwanted? It depends on the type of collector.

“Most collectors I’ve worked with buy art because they love it, and they really care about the artist, their work, and their influence. There are other people who absolutely love art, but see it as an investment,” McDaniel said.

“For collectors who see it as an investment, and they may come from finance, real estate, technology, so it’s in their DNA, they see art as an asset class, as well as an aspirational asset. They come expecting the art to hold value or appreciate. But you know that like any investment art it can lose value. For those who buy art for the love of it, the exchange markets live with the art they love, for that is their value. “