The IRS hive, Washington DC
If you are an amateur and don't routinely sell your art, leaving your paintings to your family is no big problem, but if your work has been marketed and you have an established track record and strong prices it can be. Here's the disclaimer, I am not expert in tax law and if you are facing this situation you need a tax professional, the laws are labyrinthine and always changing. The next year brings a massive increase in inheritance taxes and although few artists estates would fit into the bracket that would be taxable, a very successful artist who owns a second home and a significant collection of his own high ticket art might.
What that means is that your family might have to pay tax on the work in your inventory upon your death. If you are a very big time artist you may carry life insurance to cover that for them. There have been lots of court battles surrounding the estates of the highest echelon of modern painters estates. There are strategies for easing that burden including trusts, and pre gifting a certain dollar value of your art to each child in the years before you shuffle off this mortal coil. There is a fixed amount you can give each child a year tax free, I believe it is currently about 13,000 dollars.
I know an older artist who is both very prudent and successful. He has enormous discipline and a great way to deal with this. Here's what he does. Every year he chooses his best painting, and doesn't sell it. Instead he keeps it for his children. He has a closet full of his best art stored carefully as a legacy to them. Each year he can give one painting to each of his children, up to a certain value. That way they don't end up with the dregs of his career laying about the studio, but the best collection of his work that anyone has. Great gift.
Some artists have asked the executors of their estates to burn a certain number of their paintings upon their death. Some artists leave their estates to museums. I intend to have all of my unsold paintings encased in Lucite and made into a gravestone. My epitaph will be inscribed on that, saying
STAPLETON KEARNS, HE WAS OK.