"How to Create Luck and Protect Art Collections with Trusts and Foundations"

"How to Create Luck and Protect Art Collections with Trusts and Foundations"

Luck is often seen as a random occurrence, something that happens by chance. However, what if there was a way to actively create luck for yourself? Jason Roberts introduced the concept of "Luck Surface Area" (LSA), which suggests that you can increase your chances of experiencing lucky events by doing more things and telling more people about it. In other words, taking an active approach to life can create optimal conditions for luck to happen.

This idea of creating luck aligns with the "Fixed vs Growth mindset" concept, where those with a growth mindset believe in their own agency and take responsibility for their success. On the other hand, those who attribute their success to luck often feel that their lack of success is not their fault. However, there are individuals who have developed a skill for creating luck in their lives.

Luck can be categorized into four types: accidental luck, active luck, prepared luck, and magnetic luck. Accidental luck is like the luck of a plant - it depends on where the seed lands. While you can't control where the seed lands, privilege does play a role. Active luck, on the other hand, is the luck you get from constantly moving around and exploring new opportunities. As Charles Kettering said, "I have never heard of anyone stumbling on something sitting down." Taking action and putting yourself out there increases your chances of luck.

Prepared luck is the luck you get from noticing lucky opportunities that others might miss. Alexander Fleming's discovery of penicillin is a perfect example of prepared luck. While the discovery itself was accidental, Fleming's background and ability to observe and take action led to its confirmation. As Seneca said, "Luck is what happens when preparation meets opportunity." By constantly keeping your mind open and being sensitive to chances, you can increase your luck surface area.

Lastly, there's magnetic luck, which comes to you because of who you are and how you behave. It's about becoming the best at what you do and refining your skills until opportunity seeks you out. This type of luck is often attributed to individualized action and can be seen as the end result of positioning yourself in a way that attracts luck.

Now, let's shift gears and talk about the protection of art collections. Managing, safeguarding, and enhancing the value of a collection is crucial for any art collector. Whether you own a painting, a vintage car, or an NFT, you want to ensure that the value of your collection is maintained and increased over time. This not only depends on the characteristics of the artwork itself but also on how you manage and preserve it.

Two vehicles are particularly suitable for the management and conservation of art collections: foundations and trusts. A foundation, especially in its philanthropic form regulated by the Third Sector Code, allows the creation of a heritage aimed at a public utility purpose. It's suitable for promoting art, culture, and artworks, as long as the foundation serves a public interest.

In recent years, the Italian legislation on the Third Sector Code has simplified the process and requirements for establishing a philanthropic foundation. With a minimum endowment of €30,000 and a notarial deed of constitution followed by registration in the National Unique Register of the Third Sector, the foundation acquires legal capacity.

Foundations, especially in their philanthropic form, offer significant tax advantages related to the world of the Third Sector. It's a way to support the arts and culture while benefiting from tax incentives.

On the other hand, trusts have become the preferred tool for protecting art collections worldwide. They are often used to safeguard and guarantee the value of both small and large collections, such as the one at the MOMA in New York. Trusts offer protection not only for the art collector but also for the artist, ensuring the appreciation of their work even after their death.

Unlike foundations, which aim to pursue a public interest, trusts focus on private purposes. A trust can have a long duration, and once it reaches its end, the assets can be transferred to heirs or third parties. The assets held in trust are protected and do not fall within the succession of the collector or the artist who established it. The management of the assets is based on the trust's regulations, written by the collector or artist.

Trustees, who are responsible for managing the trust, can carry out various operations, such as the free use or rental of artworks to art galleries. The income generated can be used to maintain or enhance the collection, or it can be distributed to the beneficiaries of the trust. Transferring a collection to a trust has no immediate tax consequences. The assets are not subject to donation or inheritance tax until the trust reaches its term, which can span several years.

Furthermore, if the artwork held in trust is of recognized historical and artistic interest, it may be exempt from inheritance tax when the trust ends. The tax implications for trusts differ from those of individuals. While trusts are subject to an ordinary tax rate of 24% on any sale of artwork, they are not subject to taxation on capital gains.

In conclusion, creating luck and protecting art collections have more in common than one might think. Both require an active approach and a strategic mindset. By actively seeking opportunities and taking action, you can increase your luck surface area. Similarly, by choosing the right legal instruments, such as foundations or trusts, you can ensure the proper management and preservation of art collections.

To summarize, here are three actionable pieces of advice:

1. Embrace an active mindset: Take action, explore new opportunities, and constantly seek growth. Luck often comes to those who actively create opportunities for themselves.

2. Be prepared and observant: Develop the skill of noticing lucky opportunities that others might miss. Stay prepared and keep your mind open to new possibilities.

3. Consider trusts and foundations for art collection management: Trusts and foundations offer various benefits for protecting and preserving art collections. Understand the advantages of each and choose the one that aligns with your goals.

By combining these strategies, you can increase your luck surface area and ensure the long-term protection and enhancement of your art collection.