Inheriting Art: What Do You Need to Know.

Art is a great many different things to a great many people. Works of art contain multitudes, and can inspire some of the most edifying emotions in the most unlikely of ways. Different works of art speak differently to different people, and their emotive power can be enough to change the course of a life. 

On a more pragmatic level, art can also be a store of value – a commodity, a long-term investment that banks on the prestige of the artist and the future evaluation of their work. Whatever the reason for which art is purchased, purchased it is – and so it becomes a part, integral or otherwise, of someone’s estate. As someone about to inherit an art collection from the estate of a sadly departed relative, what exactly do you need to know about art and inheritance? 

Art and Inheritance 

Firstly, it is important to understand works of art as similar to any other item in a deceased person’s estate. The deceased can instruct the art is given to beneficiaries just as any with any other item or property, and the art in question contributes to the calculated monetary value of an estate (calculated for Inheritance Tax purposes) just as any other item or property does.  

If someone else lays claim to artwork bequeathed unto you, the same legal mechanisms are available to you to regain control of the assets. However, just as art can be treated as property, it is also an entirely different form of property altogether – and with some unique considerations to bear in mind. 

Appraisal and Insurance 

Here, we’ll start with art as an item under your ownership – and as a store of value. A valuable art collection can be a huge boost to your portfolio, but that value needs to be protected where possible. As part of a deceased person’s estate, the artwork will already have been appraised in order to calculate the value of the estate, and its tax obligations (more on which shortly). 

However, a separate assessment of the art’s value once in your possession can give you a much clearer picture of what it is you own. At this juncture, insurance is a hugely important consideration, in order to protect the value you’ve discovered in your collection. 

Legality, Tax and Sale 

If you have works that are worth a significant amount of money – and you don’t have any real sentimental connection to said works – your first thought might be to sell. Selling art is not the simplest of tasks, though, and can bring some significant legal and tax consequences. As such, it is crucial that you engage legal experts in matters of art, even if only to ensure all Is are dotted and Ts crossed. 

Most important amongst these, both legally and financially, is the matter of taxation. If you sell a work, and the value for which it sells exceeds the value given in estate value calculations, then you as the seller could see yourself liable to paying Capital Gains Tax on the profit. Inheritance Tax is usually handled by the will’s executor and the estate itself, but if you received the works as a gift prior to the deceased’s death, you could be on the hook for Inheritance Tax too.