Frequently Asked Questions
What is the Artist Pension Trust?
APT is the first investment opportunity created specifically to provide emerging and mid-career artists with a long-term financial planning program. Established in 2004, APT has eight trusts, comprised of up to 250 artists each, totaling approximately 1500 global artists from the world’s major art centers. Each APT is a sum of individual collections within one larger collection. It is our objective to assist the artist in building a collection of his/her artworks within the context of the APT collection.
How does APT work?
Artists selected for participation invest their own works of art towards an accumulation of 20 artworks over the investment period. These artworks, by each artist then create a representative collection of that artist's career spanning 20 years. APT is the custodial party and retains the exclusive option to sell the artwork within the option period.
APT’s Curators review and select artists for participation in the program. APT's selection process consists of 10 Head Curators with extensive experience, who are highly regarded in the field of contemporary art. Following the invitation to participate in the program, the artist, and APT sign an Artist Participation Agreement. Within the first month and annually thereafter, the artist is required to propose artworks for consideration to be included in the APT Collection.
APT will store these artworks until the time at which the work is sold. During this holding period works are made available for exhibition at museums, galleries, and other pre-approved venues and/or individuals.
Why is it called the Artist Pension Trust?
The initial impulse in founding and organizing APT was around the concept of long-term financial security. Both a 'pension' and a 'trust' are designed to provide the beneficiary with a flow of income as defined by the terms of that financial instrument. APT seeks to combine the virtues of these two models while fully recognizing that 'cash flow' and 'stability' are challenges an artist faces much earlier than retirement.
The APT model, therefore, is a plan that pays out cash disbursements from the mutually invested interests (artworks) from all the participating artists upon the first sale and then extends over a 30-40 year period.
What is the investment schedule for the artists participating in APT?
Artists will invest two works a year for the first five years; one work a year for the following five years; and one work every two years for the remaining ten years; for a cumulative total of 20 works.
What happens to the artworks held by APT?
The works invested by participating artists are held by APT and are fully insured at all times. APT will initiate its own exhibitions and publications to help promote and expose the works of participating artists. The works of art will be made available for loan to museums, galleries, and other pre-approved venues and/or individuals.
Why hasn't this kind of program for artists been set up before?
Traditional methods of financial planning are not practical for most artists because of the ways in which their careers unfold and the unpredictability of their income. Consequently, few have readily available income to invest in conventional investment programs.
Why should an artist participate in APT?
There are no structured, market-based investment programs that allow an artist to directly participate in the long-term value appreciation of his/her artworks. While young artists are not necessarily concerned about life insurance and pension plans, intelligent financial planning should be a lifetime concern.
Most professionals in the world have the notion of setting aside some of their monthly/yearly income for their pension, which proves to support them during low work periods or unfortunate health complications and of course retirement. APT is a unique opportunity for emerging and mid-career artists to embrace long-term financial planning, at an early stage without any cash investments whatsoever.
How can APT benefit my career? Will APT promote me as an artist?
APT is aware that each participating artist must develop and have exposure to progress their career. APT Artists are selected to join by our leading curators (art market professionals) from all over the globe. By becoming an accepted artist you are entering into the largest growing community of artists worldwide. APT provides each artist with a profile on the unique APT Global website, allowing artists to publish and share within a select circle of international artists and curators. APT will attend global art fairs and curate exhibitions to promote the artist and their work. Expansion is planned and will see the opening of new trusts, thus offering the pension plan to many more “select” artists from all over the world.
How can APT ensure that it will generate meaningful income for its participants?
APT has assembled a team of highly-esteemed and experienced business professionals. In developing the business model and projecting APT's performance, Professor Dan Galai, a world-renowned authority in risk diversification theory, has developed the program to allow for an optimal distribution of risk and return.
APT’s team of leading art world professionals select artists to join the program. This team has an outstanding track record of identifying emerging and mid-career artists and nurturing their careers. APT is constantly adding new global art professionals to their curatorial team.
Since the investments are the works of the very investors, expectations should be in line with the reality of the art market.
Why don't the artists just hold onto their own work and realize the appreciated benefit themselves?
APT allows the artist to effectively participate in the long-term value appreciation of his/her artworks while storage, transportation, and insurance costs are covered. In addition, the invested artwork becomes part of a global network for exhibition and promotion. Most importantly, by drawing upon the concept of mutual assurance societies, each participating artist benefits from the commercial success of 249 other participating artists. This aspect of the program provides artists with a unique mechanism for risk diversification.
In our view, no single artist can achieve this potentially attractive risk diversification and investment returns on his/her own.
Will the works be exhibited or leased while held by APT?
Any work that is deposited with APT will be made available for loan to museums, curatorial projects and other carefully selected, private and/or public lending venues. APT has a structured lending program that makes every effort to support and accommodate the artists' career development.
The greatest advantage to the participating artists is that all APTs provide exposure to an extraordinary, global network of professionals and collectors. Efforts will be made by the global network of APT curators to promote and encourage broader market and curatorial opportunities for the artist.
Are there any other benefits to the artist?
The primary benefit to artists is the diversification and mutuality of the risk. An artist whose work sells for less than another will be the greater beneficiary in the pool (32% of the net proceeds derived from sold works). It will provide long-term financial benefits and security that simply are not available for the artist on his/her own. To be clear, each artist whose work is sold receives 40% of the net proceeds derived from the sale. Thirty-two percent (32%) of that sale goes to the pool. The other 249 artists will benefit from the 32% contribution based pro rata on the number of artworks they have deposited with APT. These artists will receive the proceeds on an annual distribution date.
In addition, the collective judgment of APT’s curators when selecting an artist to participate is in itself a powerful endorsement of the quality of that individual's work and its financial potential in the future.
Will more successful artists end up subsidizing lesser successful artists in APT?
This is the essential nature of all mutual assurance programs. Therefore, to a certain extent this is also true for APT. Still, participating artists who invest equally upfront, benefit equally from the pooled funds at that time when the works are sold.
However, APT is distinguished by providing a financial benefit to its participants beyond those of traditional mutual assurance programs. Participants receive 40 percent of the proceeds from the sale of their work directly and independently, 32 percent is entered into the pool, while 28 percent shares the storage, conservation and insurance costs. This ensures artists profit, directly and substantially based on their individual commercial success.
What criteria do you use when accepting or selecting artists?
Artists are nominated by an APT Associate Curator and then voted on by the team of APT Head Curators consisting of gallerists, art school academics, and other professionals from the art world. All of APT’s curators can be viewed on-line. Artists may also apply directly. Online applications are available at www.aptglobal.org
Is gallery representation a requirement, and/or must an artist have sold a certain number of works in order to be considered? Is there a specific criteria that must be met by an artist for the review of the curators?
The selection determinations are entirely defined by the professional expertise and authority of the highly qualified art professionals who serve to make the selection. While viewpoint cannot help but come into play, they are directed to look for the most talented and promising artists currently on the scene. An artist need not have gallery representation or a sales record; for example, an artist that is just finishing an MFA program is just as much a viable applicant as an artist with a substantial resume of exhibitions and sales. However, each artist selection is ultimately based on the specific characteristic of the artist. The challenge is to identify the exceptional talent that has the greatest promise.
How are works of art selected for investment?
Working together with the APT Curators, each participating artist selects a work(s) to invest according to an optimum investment schedule. APT expects that an artwork of median current market value, representative of that year's production, which is not extreme in size or characteristics, will be the most appropriate investment in an artist's APT. Given that we encounter a wide range of mediums and approaches to art-making, the chosen work will always be a matter of conversation and thoughtful deliberation.
How and when will the works be sold?
The sale of works will be carefully managed by APT within the option period in order to maximize the monetary value from each sale and ensure that the sale is in the best long-term interest of the artist. The circumstances of a sale will be carefully considered to avoid any adverse market impact and to maximize both the selling price of an artwork as well as the advancement of an artist's career.
When possible, APT will also sell the works through the selective use of private treaty sales, auctions, and secondary market dealers.
When there is an offer to acquire the artwork that reflects the best possible return in a given market, while taking consideration for the best possible placement, APT will review the offer and respond accordingly.
APT is conceived and designed to work in tandem with the existing structure and dynamics of the art market. Its success will be driven by a confluence of interests among the participating artists, dealers and APT management to generate maximum returns from the art held in an APT.
When and how are the funds distributed?
There are two important dates: (1) The Annual Accounting date, which is December 31st; and (2) The Annual Valuation Date, which is March 31st. All invested artworks, collected by December 31st will qualify as Pool Units to be included in the pro rata distribution of the funds of the collective pool on or around the Annual Valuation Date. Therefore, all artists who have artworks deposited in APT have accumulated Pool Units that allow them to benefit from the funds distributed from the sale of any artwork sold in that year. All net proceeds in which the artist directly participates (because it is his/her artwork) will also be annually distributed on or around the Valuation Date.
Will the artist have a say when the work is sold?
The artist will likely be a part of the sales process as we anticipate that many sales will be referred to APT by either the primary gallery or the artist. If there are two similar bidding parties, the artist and/or gallery may well be consulted as to which collection would best benefit the artist's interests, but finally the determination resides with APT as the company must protect the mutuality of the program and ensure that the Other Artists in the trust see the greatest return/benefit from the sale. It is our ambition to place much of the work with public collections. It is important that APT is advised of any important events that might enhance the value and timing of a sale.
If the Company proposes to sell more than five of the Artist's Accepted Artworks within a period of three years, the Company will notify the Artist of the last of such proposed sales and shall consult the Artist regarding the Company's marketing efforts. Notwithstanding the Artist's right to consult the Company, the Company's decision in all such matters shall be final.
What will happen to any unsold work?
The artist will be notified prior to the expiration of the option period, or extension thereof, and have the right to collect the work. With effect from such notice, APT shall have no further rights or obligations in respect of such Accepted Artwork except that the Artist shall keep the benefit of any Pool Unit(s) vested in accordance with the vesting schedule set out in Schedule 4 of the Artist Participation Agreement.
Is the yearly payment determined on pool points and number of works only?
Yes, the accumulated Pool Units will determine an artist's share of the 32%. The assigned Pool Units are tied to the individual investment, not the number of actual artworks as on occasion more than one artwork might constitute a single investment. The annual distribution will also include the 40% of net proceeds from sales of an individual artist's work.
Can you give a breakdown should an artwork sell for €/$ 10,000? What deductions will be made?
The only deductions from the selling price will be commissions to a selling agent, i.e any costs associated with preparing the work for sale that are not added on to the sales price, installation - production costs, any taxes, conveyance fees, VAT, or duties that are not paid by the purchaser, and any other selling costs that are not reimbursed by the selling agent or purchaser. The commission will reflect the industry standard for a secondary market sale. It is in everyone's interest that the selling costs are kept to an absolute minimum.
The VAT or any tax due on the sale does not impact on the net profit the artists are dividing; it will be applied on top of the sale price. Is this correct?
Yes. No other costs will be deducted (other than those directly tied to the sale as explained above) as all operating costs over the lifetime of the program are covered by the 28% of the sale that is retained by the company.
Are the values of the artworks that are invested with APT subject to taxation?
No, there is no taxable event when the work is invested. Ultimately the individual artist will be responsible for any taxes due, such as income, on the sum that is distributed to them per the terms of the agreement. The prevailing tax codes of each artist's resident state or country will prevail.
What if an artist dies before the 20 years have passed?
Artworks are held by APT until the option expires. Any proceeds from the sale will be allocated according to the assignment of the artist's estate. The assigned beneficiary of an estate will receive all future distributions from APT that would otherwise come to the artist. Thus, depending on the artist's last will and testament or the relevant legal directives in the artist's jurisdiction, the relevant legal representatives will assume responsibility for the artist's participation, which includes the choice to continue depositing artworks per the recommended investment schedule. No one else can collect this income.
Is it possible for an artist to decide to leave APT?
APT designed a program that rewards loyalty to the plan and the artists who participate. As with every other plan, artists who intend to withdraw from the program will lose their benefits.
Can artists be removed from APT?
As soon as an artist deposits their first artwork investment their membership within APT becomes active. After signing the Artist Participation Agreement, if an artist does not invest artworks per the terms of the agreement; the Company has the discretion to remove an artist.
What is APT’s relationship with gallery owners and dealers?
The APT program is built upon a confluence of interests among artists and dealers. The APTs were specifically conceived in a way that supports and supplements the activities of the galleries. APT works closely with galleries to identify emerging artists and nurture their careers.
The gallery community has enthusiastically received APT and a number of leading dealers are working as APT Curators.
Galleries and dealers support us in our cause since they understand the importance of the future security value that we provide for artists. Any given collector may ask us to purchase certain artworks earlier than we would like to, that is when we usually send them over to the galleries/dealers which represent the artists that these collectors are interested in.
Everything we do for the artist while we hold their artwork is to increase the value, which benefits both the artists and their representative gallery/dealer. Many return to us to recommend other artists to join the Artist Pension Trust. However, we are very selective in our process and it is our Head Curators who take the final decision.
All parties are interested in, and benefit from, advancing the careers of the participating artists.
Is there any connection between Artist Pension Trust (APT) and Artist Trust? Are they the same organization?
No, we are separate entities, but we both provide important support services to artists. Artist Trust is a not-for-profit organization that has provided support and encouragement since 1987 to individual artists working in all disciplines in order to enrich community life throughout Washington State.