When advising executors on how tangible personal property should be valued on an estate tax return and how it should be distributed, trust and estate attorneys should be aware of state and federal regulations that restrict and prohibit the possession, transfer and sale of certain types of objects that incorporate animal parts. These items are typically found in an art collector’s estate or an estate with travel memorabilia or articles of clothing containing furs and are protected under Chapter 16 of the U.S. Code. These restrictions on possession and transfer affect the value of an object and can complicate an executor’s distribution obligations.
Though federal and state conservation laws and agencies protect many animals, I’ll focus on three common types of objects found in estates—animal furs, elephant ivory and objects containing bird parts (restricted animal products)—and discuss the federal restrictions related to the possession and transfer of such items.
Estate of Sonnabend
When art dealer Illeana Sonnabend died in 2007, her executors were faced with the task of cataloguing her art collection and distributing it in accordance with her estate-planning documents. One of the artworks in Illeana’s estate was “Canyon,” a large-scale combine created by Robert Rauschenberg in 1959. “Canyon” incorporated materials, such as paper, fabric, metal, cardboard, wood, strings, a pillow and—most notably—a stuffed bald eagle.1 The bald eagle is subject to the Migratory Bird Treaty Act (MBTA)2 and the Bald and Golden Eagle Protection Act (BGEPA),3 which impose criminal penalties and monetary fines for the mere possession and sale of bald eagles. During Illeana’s life, the U.S. Fish and Wildlife Service mandated that the work be displayed for exhibition in a public art gallery, but when she died, the estate was forced to address these possession and sale restrictions anew. The executors were presented with two issues: (1) what value should be given on the estate tax return to a work of art that couldn’t be legally possessed or sold, and (2) how could the executors legally transfer possession of such a work?
Based on the fact that it was illegal to possess or sell “Canyon,” the estate tax return valued it at zero dollars. The Internal Revenue Service, disagreeing that “Canyon” was valueless, sent the executors an unsigned draft report valuing the piece at $15 million. The executors rejected that estimate, and in response, the IRS reappraised the work at $65 million. This appraisal created a tax bill of $29.2 million, to which the IRS tacked on a 40 percent undervaluation penalty. The total tax bill after all was said and done: slightly over $40 million, plus interest. After a lengthy dispute, the parties agreed on the following settlement: (1) the work would be valued at zero; (2) the work would be donated to a non-profit museum (and because the work was valued at zero, there would be no charitable deduction); and (3) in exchange, the IRS would drop its tax claim against the estate. Ultimately, the Museum of Modern Art in New York benefited from this dispute when the Sonnabend estate gifted “Canyon” to it on Nov. 28, 2012.4
The issues faced by Sonnabend’s estate highlight the significance of possession and transfer restrictions on the value of an object and how such restrictions can delay estate asset distributions. While it’s unusual for an estate to own a work of art that incorporates a bald eagle, estates with furs, ivory and other bird parts are more common, and the same issues of estate tax return valuations and asset distribution apply.
Federal Conservation Statutes
To determine the value of an object that incorporates restricted animal products and how to legally transfer that object, consider state and federal statutes and regulations. The statutes relevant to the Sonnabend dispute—the MBTA and the BGEPA— are just two among several federal conservation statutes and regulations that affect how restricted animal products can be possessed, transferred and sold. Among these, the Endangered Species Act (ESA),5 the Marine Mammal Protection Act (MMPA),6 the African Elephant Conservation Act (AECA),7 the Lacey Act,8 the Convention on International Trade in Endangered Species (CITES),9 the Wild Bird Conservation Act (WBCA)10 and local state wildlife laws are most relevant. The U.S. Fish and Wildlife Service is the federal government agency dedicated to enforcing these laws.
Animal furs are one of the more common federally protected items that are found in estates. Depending on the type of fur, relevant statutes and regulations may include the ESA, MMPA, CITES and Lacey Act. These affect the possession and transfer of animal furs.
Generally, it’s illegal to possess furs that are from a species of wildlife listed in the ESA or from marine mammals subject to the MMPA.11 There are two exceptions to this prohibition under the ESA. First, furs acquired or held in a non-commercial manner on or before Dec. 28, 1973 or the date when the species was subsequently listed under the ESA may be legally possessed.12 Possession restrictions under the ESA apply only to furs acquired after Dec. 28, 1973 or the date when the species was subsequently listed under the ESA. Some furs, such as those from seals and polar bears, may be protected by the MMPA in addition to the ESA. The MMPA also provides an exception for furs possessed prior to the effective date of the MMPA on Dec. 21, 1972.13
Second, furs that qualify as antiques are exempt from the ESA possession restrictions. For a fur composed in whole or in part of any endangered or threatened species to qualify as an antique, the fur must be at least 100 years in age and must not have been repaired or modified with any such species on or after Dec. 28, 1973.14 The MMPA doesn’t have an antique exception.
Generally, it’s illegal to transfer furs that are from a species of wildlife listed in the ESA or from marine mammals subject to the MMPA, unless a permit is obtained. However, antiques may be legally transferred, even if that transfer is a sale.15 Subsequent ownership of restricted animal products is more difficult when the transfer of the property is international. CITES outlines proper documentation for imports and exports.16
Asian and African elephants are both listed as species of wildlife to which the ESA applies; therefore, the possession and transfer of elephant ivory are regulated under the ESA in a similar manner to furs.17 However, African and Asian elephant ivory are treated differently under the Code of Federal Regulations (CFR), so knowing the type of ivory being dealt with is very important.
Possession and transfer restrictions, and the exceptions thereto, under the ESA for Asian and African elephant ivory are the same as those discussed above for furs that are from species of wildlife listed in the ESA.18 The relevant pre-act date for Asian elephant ivory is June 14, 1976,19 and the relevant pre-act date for African elephant ivory is Feb. 4, 1977.20
In addition to the possession and transfer restrictions listed in the ESA, African elephants are specifically mentioned in the CFR, and the regulation of African elephant ivory is more nuanced.21 With African elephant ivory, you need to consider not only when the ivory was acquired or imported, but also whether the ivory is raw or worked. Raw ivory refers to any tusk, and any piece thereof, the surface of which, polished or unpolished, is unaltered or minimally carved. Worked ivory is everything that’s not considered raw.22 There are slight variations to the raw and worked African elephant ivory restrictions that should be considered.23
Objects with Bird Parts
Objects with bird parts are generally subject to the MBTA, ESA and WBCA.24 The MBTA provides the most comprehensive protection for birds and articles incorporating bird parts and covers more bird species than the ESA.
The MBTA makes it illegal to possess, sell, purchase, transport, ship, export or import any migratory bird, any part, nest or egg of any such bird or any product, whether or not manufactured, which consists, or is composed in whole or part, of any such bird or any part, nest or egg thereof.25 This protection is extremely comprehensive; thus, the presence of a single feather of a protected bird could make an entire object illegal to own. The CFR (not the MBTA itself) provides a limited exemption to the general prohibition against owning articles that incorporate protected bird parts and permits such articles acquired prior to the effective date of federal protection under the MBTA to be possessed or transported without a permit.26
In addition to the MBTA, bald and golden eagles receive additional protection under the BGEPA. Generally, the BGEPA makes it illegal to take, possess, sell, purchase, barter, offer to sell, purchase or barter, transport, export or import, knowingly or with wanton disregard, a bald or golden eagle or any part thereof.27 However, the BGEPA doesn’t prohibit possession or transportation of any bald eagle, alive or dead, or any part, nest or egg thereof, lawfully taken prior to June 8, 1940 and doesn’t prohibit possession or transportation of any golden eagle, alive or dead, or any part, nest or egg thereof, lawfully taken prior to Oct. 24, 1962.28
Transferring ownership of objects with bird specimens or their parts is far more difficult than transferring furs or ivory. Generally, with very limited exceptions, permits are required to take, possess and transfer such objects.29 Unfortunately, the way the MBTA, BGEPA and CFR sections related thereto are drafted, there’s not much you can do with items incorporating protected birds or bird parts. If you can prove such parts were lawfully acquired before the relevant federal protection date, gifting to a museum may be the best option.
Effect on Estate Administration
As highlighted by the Sonnabend estate’s ownership of “Canyon” and the conservation statutes and regulations discussed above, dealing with estates containing restricted animal products can affect the value of the estate and complicate its administration. In dealing with these estates, you’ll want to know:
1. when the article was acquired;
2. how the article was acquired;
3. how the article was used after acquisition;
4. what type of animal(s) the article incorporates;
5. the age of the article; and
6. any documentation accompanying the article that helps verify its age or how it was acquired, such as old appraisals, import or export papers or photographs showing the article at some earlier point of time.
This information will assist you in determining whether possession, transfer and sale of an animal fur, elephant ivory or article incorporating bird parts is legal.
—The author acknowledges John E. Barlow, a student at Emory Law School in Atlanta, for his assistance with this article.
1. See, e.g., Eric Gibson, “The Illegal Eagle and a Baldly Grasping IRS,” Wall St. J., Dec. 2, 2012, at http://online.wsj.com/article/SB10001424127887324705104578151561581708972.html.
2. 16 U.S.C. Sections 703-12.
3. Ibid. at Sections 668-668(c).
4. See “Art’s Sale Value? Zero. The Tax Bill? $29 Million,” N.Y. Times (July 22, 2012), at www.nytimes.com/2012/07/22/arts/design/a-catch-22-of-art-and-taxes-starring-a-stuffed-eagle.html?pagewanted=all; Patricia Cohen, “MoMA Gains Treasure That Met Also Coveted,” N.Y. Times (Nov. 28, 2012), at www.nytimes.com/2012/11/28/arts/design/moma-gains-treasure-that-metropolitan-museum-of-art-also-coveted.html?pagewanted=all; Eileen Kinsella, “Rauschenberg Eagle Ruffles Feathers,” ARTnews (May 1, 2012), www.artnews.com/2012/05/01/rauschenberg-eagle-ruffles-feathers/.
5. 16 U.S.C. Sections 1531-44.
6. Ibid. at Sections 1361-1407.
7. Ibid. at Sections 4201-45.
8. Ibid. at Sections 3371-78.
9. 50 C.F.R. Section 23.
10. 16 U.S.C. Sections 4901-16.
11. Ibid. at Sections 1372(a), 1538(a).
12. 50 C.F.R. Section 17.4(a).
13. Ibid. at Section 18.14. It may be necessary to file an affidavit with the responsible government agency to establish pre-act status.
14. 16 U.S.C. Section 1539(h).
15. 16 U.S.C. Sections 1538(a), 1539(a), 1539(h). The Endangered Species Act only regulates interstate and foreign commerce. State or local wildlife laws should be considered when contemplating transfers.
16. 50 C.F.R. Section 23.18.
17. See “U.S. Fish and Wildlife Services, Asian Elephant Ivory” (2003), http://library.fws.gov/IA_Pubs/asian_elephant_ivory03.pdf.; See “U.S. Fish and Wildlife Services, African Elephant Ivory” (2003), http://library.fws.gov/IA_Pubs/african_elephant_ivory99.pdf.
18. 16 U.S.C. Sections 1538(a), 1539(a), 1539(h).
19. See “U.S. Fish and Wildlife Services, Asian Elephant Ivory” (2003), http://library.fws.gov/IA_Pubs/asian_elephant_ivory03.pdf.
20. See “U.S. Fish and Wildlife Services, African Elephant Ivory” (2003), http://library.fws.gov/IA_Pubs/african_elephant_ivory99.pdf.
21. 50 C.F.R. Section 17.40(e).
22. Ibid. at Section 17.40(e)(1).
23. Ibid. at Section 17.40; See “U.S. Fish and Wildlife Services, African Elephant Ivory,” supra note 20.
24. 16 U.S.C. Sections 703-12, 1531-44, 4901-16.
25. Ibid. at Section 703(a).
26. 50 C.F.R. Section 21.2(a).
27. 16 U.S.C. Section 668(a).
29. 50 C.F.R. Sections 21.11-.14, 22.21-.28.