How A Collector’s Estate Planning Is Shaping the Fall Auction Market

In addition to his role as chairman emeritus of the Estee Lauder Companies, Lauder was a dedicated philanthropist who donated hundreds of works and millions of dollars to institutions like the Metropolitan Museum of Art and the Whitney Museum of American Art. He served as trustee of the latter for 34 years and largely funded the Whitney’s new building in Manhattan’s Meatpacking District. Lauder’s passing in June, at age 92, is a hard blow to the New York City art community.

It is fitting that Sotheby’s sale of his collection will take place in the Whitney’s former home, Marcel Breuer’s brutalist building on Madison Avenue, which the auction house purchased last year as their new global headquarters. The crown jewel of the collection is Gustav Klimt’s Portrait of Elisabeth Lederer that is estimated to sell for $150 million. Though recently lent to the National Gallery of Canada, it is one of only two full-length Klimt portraits in private hands. Two Klimt landscapes, six Henri Matisse sculptures, and an Edvard Munch painting are also anticipated to draw multimillion-dollar bids. The stakes are high for Sotheby’s as they face a down market and a steep financial guarantee to the Lauder estate.

Given how quickly the collection was secured for auction, it is likely that Lauder stipulated its sale in his will, rather than gifting it to family members and allowing them to decide. His heirs will only be responsible for paying capital gains tax on the amount by which the works have increased in value since his death, another reason to get them sold as quickly as possible before the market picks up. Selling his collection while he was still alive would have incurred much heavier taxes.

Lauder donated the bulk of his pieces before passing, and even though his primary impetus was to support the expansion of important museum collections, he also would have received a charitable income tax deduction. Unlike selling, gifting art during one's lifetime comes with a lower tax rate than gifting after death. This may be why only the remaining 55 works Lauder lived with out of the hundreds he collected through the years are coming up for auction.

The proceeds of many major private collections auctioned during the past few years, including those from the estates of David and Peggy Rockefeller in 2018 and Microsoft co-founder Paul Allen in 2022, have been donated entirely to charity. It has not been announced if this will be the case for Lauder’s collection. Given his dedication to supporting the arts, as well as medical research and education, it is entirely plausible that his will stipulated one final philanthropic gesture. Regardless, its sale could not have come at a better time for Sotheby’s as they scramble to build interest and buying power for the fall auctions after several disappointing quarters. Lauder’s approach to estate planning has given one last gift to the art world.