Rare Swatch Collection Sells for CHF 1.3 Million

Swatch by Keith HaringA rare collection of 1,000 original watches by Swatch were recently sold by Sotheby’s at a Geneva auction for CHF1.3 million ($1.3 million). The collection was comprised of the timepieces created in the brands most popular period in the 1980’s. The brand was so popular that it’s credited with saving the Swiss watchmaking industry.

The collected had been stored in an attic in canton Neuchâtel for years. It included 380 prototypes, as well as technical drawings, dials, sketches, and artwork spanning the 1981-1986 period. It belonged to the Swiss designers Bernard Müller and Marlyse Schmid, who were responsible for creating much of Swatch’s iconic visual identity in the early 1980s alongside Müller’s engineer brother Jacques.

The Schmid & Müller collection is a delight for collectors and appreciators. As Sotheby’s watches department manager Pedro Reiser explained,

It’s very rare to have such an extensive collection. This completely unique and historic selection of timepieces, components, and designs maps out the creative process during the fascinating early years of Swatch.”

Swatch was founded because it’s creators saw the need for a Swiss-made plastic watch that didn’t sacrifice quality while hitting an affordable price point. It’s development required technical innovation, with each watch only having 51 parts, as opposed to nearly 100 needed to make a traditional wristwatch. This reduction in parts allows it to be produced for 80% cheaper and assembled using a fully automated system.

For us the challenge was to establish plastic as a noble product,” said Müller. “Among the various components, the watch dial was the most expensive piece. This initially meant we were only able to use one or two colours at most. Swatch’s almost instant success allowed us free reign with our creativity, enabling us to change the look in an infinite number of ways following new fashions and trends.”

The Schmid & Müller collection contained a number of iconic pieces, including the original Jellyfish Swatch — the first transparent watch that started the trend of see-through watch movements. It was designed by Marlyse Schmid, and it was part of a 200 piece limited edition.

It also included original prototypes from the “Swatch Art Special” series, including the first model featuring artwork by “Kiki Picasso.” At the height Swatch’s popularity at the end of the 1990s, a single model sold for CHF60,000.

Another highlight was a series of models and artwork by US artist Keith Haring, who took two years to come up with his 1986 collection of six designs.

There’s been renewed interest in vintage watches as of late. Back in April, Sotheby’s auction house in Hong Kong sold one of the biggest private collections of Swatch watches in the world. The collected contained 5,800 timepieces that had been collected over a period of 25 years. It sold for $6 million.

Müller hopes that his collection is able to stay in one piece and enrich other Swatch collections.

Estate Planning for Your Art Collection

art-collectionsAs an art collector, a good rule of thumb is to buy what you like, not what you expect to appreciate in value at the fastest rate. First and foremost, it’s a collection and something to be appreciated and enjoyed. Secondarily, it’s an investment. And when it comes to investments, there’s always one tricky thing to figure out: inheritance. An increasingly important part of estate planning is figuring out what will happen to your art when you are no longer around to appreciate it.

One problem many heirs run into when they inherit pieces or an entire collection is unwanted tax consequences, especially if the person isn’t related to the collector or simply isn’t as personally invested in the art as the owner once was. While the owner may feel a strong responsibility towards their art, it’s not necessarily going to resonate with their children or loved ones as much as it once did them. Family’s run into unintended challenges when resources have to be allocated towards something the collector is no longer around to cherish.

Luckily, there are specialist advisers well equipped to handle such issues. They have a deep understanding of tax law in estate planning and philanthropy as they apply to each country and it’s unique tax codes.

This vocation requires a specific background and niche expertise not just because of it’s complexity, but because it’s difficult to put a price on art. The value of art actually changes depending on your use for it. If you’re going to keep it, give it away, or lend it to an institution, you’re going to have different goals and priorities in mind.

For example, if you want to pass your Cezanne on to your children, it’s actually better for it to be valued as low as possible. Transfers to heirs are taxed at very high rates in most countries if the estate or gift amount is of a large enough value. You can appraise a piece of art for less for gifting purposes because it is illiquid, and there may not have been comparable sales in recent years. Because a precise value for the work is hard to gauge, tax authorities are likely to accept a low estimate, but it must come from an independent appraiser. Keep in mind, rules on valuation and tax treatment vary from country to country.

Lack of liquidity can sometimes help and sometimes hurt in estate planning. When you sell, the transaction occurs in a public market and is recorded, creating a potential taxable event for the new owners.

One complication comes when an illiquid asset generates a liquid liability. Say a collector’s heirs inherit $15 million of artwork and the same amount of liquid assets, as well as a $15 million estate tax bill. They can either sell the liquid assets to pay the bill which will leave them with all their wealth tied up in art, or they can sell the art.

Financial advisers often come up with complicated techniques for transferring ownership of art without transferring the art itself. For example, collectors can sell art to heirs and then lease it back to them, but the tax break, depends on a jurisdiction’s legal framework.

Another complication comes from a feature of many tax codes that state that property can be subject to estate tax wherever it is located when the owner dies. So, if you normally reside in Switzerland and decide to bring our Warhol to Quebec to hang in your second home, but die during your layover in Chicago, the United States will assess estate tax on the value of the Warhol. Even worse, because you are not an American citizen or resident, only the first $60,000 of the piece’s value escapes taxes, instead of the $5.43 million that is exempt for American citizens.

Another area of concern for art collectors is that of tax-efficient philanthropy. When giving art to an institution, you want to appraise in the opposite direction from which you would gift. In this case, it is best to get as high an estimate of valuation as possible in order to maximize the tax write-off. There is also a case where a collector may maintain ownership of an artwork for a given period, while lending their work to an institution. Under American law, a collector can lend work to an institution and take a prorated charitable deduction, but the collector must give the work away entirely within 10 years or at death (whichever comes first.)

Each country has its own set of rules and regulations towards estates, taxation, inheritance, etc, so it’s important to have an advisor skilled in every aspect of these laws and codes who can walk you through this complicated process. Without the proper planning, you can never be sure with whom or where your art collection may end up.

Picasso’s ‘Women of Algiers’ Sold!

BRITAIN-ART-AUCTION-PICASSOThis past weekend in New York, 35 lots of artwork went up for auction including some of the most prized art paintings and sculptures in history. Of the 35 lots sold, 34 of them racked in a total of $706 million.

One painting which was most coveted at the auction was Pablo Picasso’s painting Women of Algiers which sold for a record $179,365,000. The extremely high prices were driven by artworks investment value and by the wealthy collectors looking for the top artwork in the world.

Also sold at the auction was the Giacometti life size sculpture Pointing Man, which sold for an astonishing $141,285,000. These two pieces of art are some of the most expensive ever sold at an auction.

Fox News reported,

Pointing Man, depicting a skinny 5-foot-high bronze figure with extended arms, has been in the same private collection for 45 years. Giacometti, who died in 1966, made six casts of the work; four are in museums, and the others are in private hands and a foundation collection.”

The piece by Picasso, Women of Algiers, once owned by the American collectors Victor and Sally Ganz, was inspired by Picasso’s fascination with the 19th-century French artist Eugene Delacroix. It is part of a 15-work series Picasso created in 1954-55 designated with the letters A through O. It has appeared in several major museum retrospectives of the Spanish artist.

These pieces are just some of many which sold for millions this past weekend in New York.

For more about Etienne, please visit Etienne Kiss-Borlase’s official website.