In the first in a series of articles on estate and tax planning for art collectors, Hilesh Chavda, Private Client Partner at Spencer-West LLP, talks to Lucinda Blythe at The Pedestal about the importance of planning ahead.
PROTECTING YOUR TREASURES FOR THE FUTURE
Some people may purchase one or two pieces to furnish their homes, others may be ardent collectors with museum quality collections. Wherever you sit on the spectrum, one thing remains the same: Love for the treasured pieces that you worked hard to find and have cared for.
It is understandable that you worry about what is going to happen to your precious possessions and collections when you leave this mortal coil. The question is how to protect these pieces.
Where there’s a will there’s a way
It is not enough to worry. Something needs to be done. This is where a will comes in.
Seemingly simple but sometimes overlooked and often not given proper thought. This document will control what happens to your possessions on your death. With careful thought and expert advice your will is a powerful document that can provide peace of mind.
Who should benefit?
You may have very clear ideas to whom your prized possessions should go. It might be a loved one with the same passion for your treasures. It might be that you want a charity or museum to have a collection that you have pieced together over many years. Whatever your wishes, you can only be sure they will be carried out on your death, if you put them in your will.
Preserving your collection
Particularly if you are an avid collector, you may want your carefully curated collection to stay intact. It would be a shame for individual pieces to be sold off to pay taxes or the collection split between various beneficiaries. Whole collections can be bequeathed to a beneficiary (a loved one, museum or charity). You may also want to do more sophisticated planning, such as establishing trusts, to ensure collections are kept together for years to come.
Tax doesn’t have to be taxing
Tax can be an issue if not considered carefully. Inheritance tax is a fact of life. However, a rather prosaic problem is how the tax bill will be paid. It would be sad to see your possessions sold to settle a tax bill if you wanted your loved ones to keep them. A properly drafted will can help prevent this from happening. You can also specify whether tax is paid by the recipient of the pieces or it is to be settled from other assets in your estate.
There is planning that can be done too. For example, if your gift at least 10% of your net estate to charity you can benefit from a reduced rate of inheritance tax.
Whatever your wishes, they need to be reflected in your will. Without this, your prized possessions risk passing to the wrong people, collections being broken up or sold and unnecessary tax issues. With expert advice and careful consideration, you can protect your treasured possessions for the future.
Hilesh Chavda, Private Client Partner, Spencer-West LLP | + 44 (0)20 7925 8080 | email@example.com