The artist's estate: practical hurdles and legal opportunities

From lawyer Dr Hannes Hartung TEP | Lecturer, Executor of Wills (AGT)

VIDEO of the lecture by RA Dr. Hannes Hartung at the Galerie der Künstler (from 36:10)

The artist is transient as a human being, but his art remains forever.

Dear artists, dear friends of art,
hardly any subject is as emotionally fraught and indeed challenging as planning one's own succession. And yet the regulation of the succession to his works is so important that the artist should definitely deal with it during his lifetime. I would like to share my own thoughts with you on this subject:

I. The artist's estate

  1. The estate generally includes everything that belonged to the artist in the legal sense and now passes to the heirs by way of universal succession. This is therefore everything that belonged to the testator. In a narrower sense, the artist's estate is of course the artist's artistic work, insofar as it exists or can still be acquired.

For the development of any artist's legacy, it is essential which Will of the artists had. Clues to this can be found in his will. As a rule, however, it is the conversations with his relatives and friends. An artist's estate is not an end in itself.

  1. So what should the artist's estate do? As a rule, the artist wishes to have his works exhibited and distributed even after his death. In many cases, unfortunately, the economic success of an artist only becomes apparent after his death, so that the sale of individual works certainly corresponds to the artist's will. Finally, it is significant whether the art can also enter art history, i.e. whether an art historical reappraisal can begin.
  2. Exhibition spaces of the artist's estate can be museums and auction houses as well as galleries. Before taking this step, however, the work must be secured and inventoried. The first step is the inventory, followed by a detailed catalogue.

As in all things in life, such steps require the Fundingwhich are possible, among other things, through sales. Common sources of income are sales of works from the artist's estate. It is also possible to receive remuneration from the collecting society VG Bild Kunst, which usually administers the exploitation rights of the deceased artist.

  1. Here is the Resale right significant, which in Germany grants a contribution of 4 % up to 3000 euros and from 50,000-100,000 euros a contribution of 3 %. If the artist was sculpturally active as a sculptor, one can also think of posthumous reproductions through kisses and drains.

As a matter of principle, I recommend that artists' estates only be pursued on their own if the artworks are worth at least Euro 300,000.

  1. The archive is the heart of an artist's estate. The artist's archive is indispensable for art history. The artist's archive contains all the artist's records, correspondence and documentation of his or her works. A catalogue raisonné of an important artist is indispensable in order to be the authority for attributing works. A catalogue raisonné must be complete. What is not included in the catalogue raisonné is considered inauthentic. At the same time, all works that belong to the oeuvre of the artist but are also owned by third parties must also be included in the catalogue raisonné.

II. Inventory and sustainability of the estate

  1. Please critically examine the artist's estate materially. Emotionally and immaterially, the works are priceless and perhaps even quasi unsaleable. In material terms, however, the starting point is and remains first of all at what prices the works have been sold on the art market in recent years primarily (for the first time) or even secondarily (at least a second time). The market values, insofar as they are not already known, can be found with or research through external expertise (through sworn art experts and art consultants).
  2. It makes no sense to invest a lot of money if no higher profits than € 300,000 have already been achieved during one's lifetime, whereby one should have achieved at least € 50,000 a year. With a turnover of € 50,000 a year, one has achieved the minimum costs if one wants to employ an external curator to take care of the estate. For this reason alone, it will make sense for most artists' estates to bundle several artists' estates. These fixed costs include staff, real estate (rental), and scarce administrative and travel expenses. 50,000 € is therefore the minimum annual amount that must be invested if staff must be financed.

The primary aim of the artist's estate is certainly to allow the artist to participate in cultural life even after his death through exhibitions. In addition, there is the marketing on the primary on the secondary market. If the work has already been sold anyway, further marketing is usually easier than on the primary market.

  1. But have no fear. If the artist's estate does not reach the aforementioned figures, one should look into further estates in Artists' estates Together you can save a lot of money, especially on the subject of cost synergies for exhibition spaces.

Once you have clarified all these questions, you can use the Estate work approach. The estate can be administered in various ways. Private administration by the artist's heirs is conceivable. The estate then remains in the private assets of the family. A prominent example is the Joseph Beuys Estate, also represented by the author.

III. The artist's estate in a foundation and tax issues

  1. In principle, it is possible to convert the sexton's estate into a own legal identity such as a foundation. A foundation is a legally independent asset. Here, too, a value limit of € 300,000 applies if one wishes to establish an independent foundation with legal capacity.
  2. What needs to be clarified here is who is to manage the foundation. Is it the heirs themselves or should a professional manager do this? The establishment of a foundation brings with it a number of considerable tax advantages. Special expense deductions of up to €1 million, which can be spread over up to ten years, are possible. By setting up a charitable foundation, it is possible to issue donation receipts which donors can claim against tax.
  3. In addition, donations and endowments to the capital estate can be deducted up to 20 % as special expenses from the donor's total amount of income. Insofar as the artist's estate is in the capital estate of a community foundation, it is not taxed at all. A valuable artist's estate should in any case be transferred to a foundation within one year of the artist's death, if otherwise high inheritance taxes are due. The tax-free amount is Euro 500,000 for the spouse and Euro 400,000 for children. More distant friends and relatives, however, only have an allowance of 20,000 euros.
  4. In the case of the art foundation, up to one third of the income can be used by heirs for their own purposes in a mixed foundation design. All other uses of funds must benefit the estate. Asset reallocations within the artist's estate are generally harmless if the funds gained from them are used in accordance with the charitable status. Two thirds must flow into the specific foundation work, one third can remain with the heirs.

IV. Administration of the estate and communities of estates

  1. If one's own collection volume is not sufficient for a foundation, one should join forces with several artists' estates and establish a foundation together with them. For Bavaria I have already mentioned the Umbrella Foundation Art Heritage Bavaria which is intended to preserve and display significant Bavarian artists' estates for eternity.
  2. The Bavarian State Painting Collections and other major museums only accept outstanding artists, and from them then only the outstanding works. One should therefore conscientiously examine whether it makes sense to transfer the blue chips of an artist's estate out of public hands, while the rest, after all, still belongs just as much to the sexton's estate and wants to be well managed.
  3. A sexton's estate should be managed as the artist wished or the copyright should also be remunerated. Copyright does not expire until 70 years after the artist's death. Thus one can decide whether to keep a Sunset or a Eternity Estate At a Sunset Estate estate, this will be shown for another 20 years or so.

V. Conclusion

Establishment of a joint Bavarian Art Heritage Foundation

In my opinion, the immense financial challenges in Bavaria can only be successfully solved in the long term by a joint Bavarian Art Heritage Foundation.

In my opinion, a Bavarian Art Heritage Foundation as an umbrella organisation and framework for the important Bavarian artists' estates is indispensable, if only because of the financing and conceivable support from the public sector. The foundation should have its own museum for the artists' estates, in which the artists' works are shown in temporary exhibitions. In addition, all these collections would be looked after intensively by curators.

From the platform of a museum, it will also be much better and easier to make the important works accessible to the public and also interesting for national and international loan traffic. Let us tackle this important issue together. Together we are stronger.

I look forward to further exchanges with you on the establishment of the Bavarian Art Heritage Foundation. I have already secured the website for this purpose.

If you have any further questions about this article or your artist's estate, I am always happy to answer them personally. You can find my contact details below.

I wish you and the artist's estate, be it yours or that of their dearly departed, all the best and a successful future!

With warm regards

Your Hannes Hartung