The art estate
No one likes to create something that will be forgotten. Preserving, cataloging, and maintaining artists' estates has become increasingly important in recent years. This article addresses various questions relating to artistic estates
How do I “bequeath” my artistic estate to posterity?
During their lifetime, artists should carefully consider how they want to preserve their artistic estate for posterity and transfer it in an orderly manner. In addition to a will, the establishment of a foundation or association is also an option. The appropriate choice will depend on the expected returns. If high returns are expected, the choice will often be in favor of a foundation. With the growing importance of the art market amid a drastically changing museum landscape, the establishment of such foundations has also increased rapidly in recent years.
Why a foundation?
Artists are often concerned with the possibility of leaving behind their artistic oeuvre in an adequate form, i.e., one that does justice to the work. Collectors, on the other hand, regularly express the desire to preserve their art collections, which have often been assembled with great love and expertise, and, if necessary, to make them accessible to the public. These wishes can be fulfilled by establishing a private foundation; an “artist foundation” has the following advantages:
- The work or collection can be kept together in the long term and will not be “scattered” (e.g. through inheritance).
- The purpose of the foundation as defined by the founder is binding and must be implemented.
- The administration of the art is removed from the control of the heirs, who are often not qualified to do so.
For all these reasons, establishing a private foundation is a common tool for preserving and making targeted use of art objects.
What needs to be considered when establishing art foundations?
The purpose. The dedicated assets must amount to at least EUR 70,000.00, and the foundation must be based in Austria. Foundations cannot be an end in themselves: a charitable foundation must be geared towards charitable or benevolent purposes, and a private foundation must also have a purpose that goes beyond the management of the foundation's assets. In the case of art foundations, the purpose is often sensibly directed towards “the preservation and care of artistic works through exhibitions, loans, the compilation of catalogues of works, etc.”, “the protection of copyrights” and “the promotion of young artists”.
The foundation declaration. The establishment of a private foundation requires the formal establishment of the foundation declaration. This can be an establishment among living persons or a foundation upon death. The latter requires a last will and testament. The private foundation “comes into being” upon entry in the commercial register. The foundation deed is the document of a foundation that is publicly available in the commercial register and must contain a minimum amount of information specified by law. Any additional information is regularly included in a supplementary foundation deed, which does not have to be submitted to the commercial register court because there is no justified public interest in disclosing all details, such as the names of beneficiaries. This recognized interest of private foundations in maintaining confidentiality with regard to the supplementary foundation deed also means that, in common practice, assets exceeding the minimum amount specified by law are dedicated to foundations by means of additional deeds (“declarations of dedication”).
The foundation declaration must be drawn up in the form of a notarial deed. It is important to ensure that the form is strictly adhered to, even in the case of donations made after the foundation has been established, as the case of Austria's most important contemporary artist, Franz West, has taught us.
The right to a compulsory portion. The death of a founder does not affect the existence of a private foundation; the foundation's assets are separate from the founder's estate. However, donations to the foundation, as well as the granting of beneficiary status, can lead to considerable additions and deductions under the right to a compulsory portion.
Contributions to a private foundation are relevant to the right to a compulsory portion if they were made within two years prior to the death of the deceased. The decisive factor here is the so-called “asset sacrifice theory,” according to which the donation has not yet been made if the founder has retained a position similar to that of an owner (for example, if the founder can revoke the dedication of assets, e.g., through a right of revocation or a comprehensive right of amendment).
The organs. Every private foundation must have a foundation board consisting of at least three members (the founder may also be a member of the board, provided that he or she is not also a beneficiary). This board often includes friends of the artist, galleries/art dealers, curators, museum directors, lawyers, and tax advisors, with different individuals playing important roles depending on the phase (of administration) of the estate. A balanced composition of the board, decided upon during the artist's lifetime, can also help to prevent disputes.
How long should the estate “live”?
Ultimately, consideration should also be given to how long an artist's estate itself should live. The so-called sunset model is often chosen here. This provides that after a certain period of time, the estate is transferred in its entirety to art history, meaning that the estate has a specific end when the objectives, such as the creation of an archive or catalog of works or the expiry of copyright, have been achieved.
Conclusion
An artistic estate raises a number of legal questions. These range from planning and structuring the succession of assets to questions of compulsory inheritance rights. Forward-looking planning of the transfer of assets is essential for the cohesion of the artistic oeuvre.
Image: © Matthew T Rader, RgicPdBNAHo | unsplash.com
