Case Studies

Balancing Act

  • An artist came to us for help in finding a balanced way for his work to continue to provide funds for his family after his death, whilst also ensuring his oeuvre was protected and managed for the long term.

  • An artist came to us for help in finding a balanced way for his work to continue to provide funds for his family after his death, whilst also ensuring his oeuvre was protected and managed for the long term.

    We advised that he draw up a Will with two funds, one for his family and one for his 'legacy' with separate trustees appointed for each. We recommended that his ‘artistic trustees’ should comprise one family member and beneficiary, and one art professional (his longstanding gallerist). This arrangement would provide balance for decision making. We helped him prepare detailed instructions for them in a letter to accompany his Will. This set out his wishes for his artwork and what strategy his trustees should adopt in relation to future sales and ongoing promotion of his work to help meet his family’s financial needs. We also encouraged him to start the conversation now to ensure that both family and gallery were aware of his plans and in agreement with them.

    We catalogued all of his work and whilst doing so, we assigned under his direction a category for each piece: ‘core’ works were those which should form the central part of the estate’s collection after his death and which ideally should not be sold; ‘endowment’ works were ones which might support the core key pieces, say by being good examples of key styles or periods or by giving context; ‘archive material’ of various natures and importance; and finally ‘non-core’ pieces that could be sold to raise funds to meet the needs of family members and underwrite the costs of managing the estate.

    Both family and gallery were made aware of his plans and were content with the proposed strategy. This clear and comprehensive approach reassured the artist that he had done everything he could to protect his legacy as well as provide for his family.

Double Surprise

  • An artist came to us in order to put in place suitable plans for what should happen to his work after his death. He wanted his family to continue to benefit financially, but also for his work to remain in the public eye.

  • An artist came to us in order to put in place suitable plans for what should happen to his work after his death. He wanted his family to continue to benefit financially, but also for his work to remain in the public eye.

    He had been advised to set up a company in the 1990s and believed that this owned all his art. We established that in fact he had two businesses – the company that owned all paintings and sculptures from the 1990s onwards and his business as sole trader that owned all his work prior to that date, including an extensive body of prints and lithographs. The artist thus had two separate entities for his artwork. It is quite common for artists to believe that they have one active business entity but on closer examination to find that not all prior works have been transferred to it. This can cause tax problems, particularly for inheritance tax on the death of the artist where earlier works may no longer form part of the day to day business of the artist.

    In this case, we were able to confirm that both businesses would qualify for relief from inheritance tax on the artist’s death and could therefore be transferred into a flexible trust structure that would benefit both his family and the public. Solicitors were instructed to do this, and his studio was transferred to the company to ensure that it too benefitted from relief, saving 40% inheritance tax on all these assets as a result.

Change of Plan

  • We were contacted by an artist who had recently lost her husband, also an artist. The couple had Wills in place, leaving everything to the survivor. Her husband’s estate comprised the jointly owned family house (which included their studios), his business (which operated as a partnership together with his wife) and various investments.

  • The artist was in her late 70s, beginning to suffer mobility problems and needing more support with day to day life. Her daughter was consequently considering how she and her family might live with her mother to care for her in future.

    The husband's Will was simple and, on the face of it, tax efficient: he left everything to his wife, with no inheritance tax to pay because it qualified for the spouse exemption. However, it did not anticipate the daughter's position or her future inheritance; she would be moving into the family home and on the second death the daughter would face 40% inheritance tax on everything but the business (which would be exempt due to the special relief for trading businesses).

    We were able to advise on the probate process, the inheritance tax position of the artist, her husband’s estate and the daughter’s own capital gains tax position in relation to her own home. We suggested making a post-death variation to the husband’s Will. This was re-written so that half the house and studio was left to the daughter with immediate effect from the husband’s death. The value of this half share fell within the husband’s inheritance tax free amount so this legacy to the daughter was achieved with no tax charge. We were also able to introduce the daughter as a partner of the business to ensure that the artist’s business had the best chance of continuing after her death and ensuring that the daughter could draw income immediately from the business, making full use of her annual personal allowances The artist and her daughter’s family are now living together in the family home and the assets in the artist’s own estate should either be exempt from inheritance tax or fall within the tax free amount so the daughter should have no tax bill on the second death.