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Artists and Inheritance

By Joanna Boatfield
3rd Sep 2019

Planning for the time after death is rarely prioritised, but for artists it is particularly important. Failure to put in place sensible arrangements, get tax advice and agree a well-drafted will can cause serious problems include practical and administrative difficulties for those left behind, possible tax charges and also threats to the artist’s continuing legacy.

An artist’s family may be well placed to make decisions as to the future of their artist works, archives, digital footprint, royalties and so on. Equally, they may not have the knowledge or experience to deal with these aspects. In this case artists are well advised to consider appointing an ‘artistic executor’ to handle these aspects of their estate. This will often be a close friend or collaborator who has experience in the art word.

Artists might consider establishing a charity either in life or on their death to protect and curate their work. If so, there are questions as to how this ought to be funded moving forwards – are funds available from the estate to endow the charity or will it be able to generate sufficient income to cover its running costs, say from copyright, Artist Resale Rights and sales of works. Identifying the appropriate Trustees for any such charity is key.

Where there is a market for an artist’s works, there is the potential for Inheritance Tax on death at up to 40% on the value of those pieces the artist owns as well as copyright and Artist Resale Rights. For many prolific artists, the estate may include hundreds or thousands of works, often with little order to them.

It may be possible to protect most or all of the value of these works from Inheritance tax if they can be held to be actively used in a business which attracts ‘Business Property Relief’. Steps should be taken to protect this relief where it may be helpful, for example by cataloging the physical works and including them in the accounts of the business. To protect any copyright or resale rights in this way will normally require the artist to continue to practice up to the date of their death.

Many artists will make gifts of valuable artworks to friends and family throughout their career. These should be made in such a way that HMRC accept that the gift is effective for Inheritance Tax purposes, as otherwise the value of the work will remain in the artist’s estate and potentially attract Inheritance Tax. The artist should not remain able to enjoy or benefit from the gifted artworks and care is needed where works are in storage rather than transferred to the home of the recipient.

Where the estate includes artworks of sufficient historic or artistic interest it may be possible to reduce the Inheritance Tax payable by either claiming ‘Conditional Exemption’ where the beneficiaries are willing to maintain the works and give the public access to them or for pre-eminent works it may be possible to agree that the they should be accepted by the nation in lieu of Inheritance Tax.

Careful planning can minimise tax charges arising on death as well as helping to secure or enhance the artist’s reputation after death.

For more information, contact Joanna Boatfield.