Quick Summary
- Collections are part of the estate and are subject to the division of the estate.
- A professional appraisal is essential for inheritance tax purposes and to ensure a fair distribution.
- A bequest allows specific items to be passed down to heirs.
- The protection of cultural property can restrict freedom of disposition.
What happens to the collections when someone passes away?
Works of art and collections are generally Personal property. Therefore, upon the decedent’s death, it forms part of the decedent’s estate in its entirety. . This means that collections are subject to the same inheritance laws as other assets. Therefore, if the decedent did not draw up a will before their death, their collection may be divided among the heirs through the order of succession. This is because, upon the decedent’s death, all of the decedent’s possessions and assets are pooled together and then distributed among the statutory heirs in accordance with the rules of intestate succession.
When there are multiple heirs, a community of heirs is automatically formed. In principle, the purpose of a community of heirs is to jointly administer and divide the estate. The legal heirs may only dispose of their share, but not of individual items. This means that, in essence, all heirs must agree on who will receive the entire collection or parts of it. Because heirs often have differing views—especially when it comes to valuable collections—this can lead to conflicts among them.
Valuation as the Basis for Estate Planning
Before a collector begins planning their estate, they should have their collection appraised by a professional. This is crucial for several reasons: First, it serves as the basis for calculating estate tax; second, it ensures a fair distribution among the heirs.
Independent experts should be consulted for the appraisal. For significant collections, it is recommended to compile a detailed inventory that includes photographs, provenance records, and current appraised values. This inventory should be updated regularly, as market values can fluctuate significantly.
Options for Planning Through a Will
To prevent the unintended division of a collection or to ensure that specific works are bequeathed to particular individuals, there are various options for drafting a will:
Bequests of Individual Items to Third Parties
Through a bequest, individual works of art or parts of a collection can be given to specific individuals without them having to become heirs. Legatees therefore have a claim against the community of heirs for the individual works of art or parts of the collection. The heirs to whom the bequest is made are obligated to surrender the bequest. . However, caution is advised here: If the bequest is of such high value that it infringes on the heirs’ statutory shares, the bequest may be reduced accordingly.
Rules for the Distribution of an Estate to Specific Heirs
The person making the bequest may direct that the entire collection, or parts thereof, be allocated to a specific heir upon the division of the estate. The value of the collection will be credited against that heir’s share of the estate. If the value exceeds the heir’s share, a compensatory payment must be made.
Benefiting a Spouse Through a Usufructary Interest
One way to keep the collection together is to granting a usufruct in favor of the surviving spouse. Ownership passes to the remaining heirs, but the right to use the property remains with the beneficiary.
Special Considerations Regarding Cultural Property
Works of national or regional significance may be subject to cultural property protection. This significantly restricts the freedom to dispose of such works. Such objects may not be sold abroad or exported without a permit.
In addition, cantonal laws on the protection of cultural property may provide for preemptive rights, which can affect the market value of these assets and should be taken into account in estate planning. For example, the canton of Neuchâtel provides that the state has a preemptive right to cultural property.
Tax Considerations
Inheritance tax is calculated based on the market value of the works of art at the time of death and is regulated at the cantonal level. In some cantons, special rules apply to cultural property.