Laura Neal, Senior Associate in Forsters’ Art & Cultural Property team, has been quoted in The Sunday Times sharing thoughts on how collectors can avoid common pitfalls when passing works of art to the next generation.
As HMRC increases its focus on inheritance tax compliance, the article explores the practical steps individuals can take to ensure art collections are properly documented, valued and administered as part of their wider estate planning.
One of the most effective ways to avoid difficulties is to maintain accurate records. As Laura explains:
“One of the best ways to avoid pitfalls is to have an up-to-date inventory of your collection showing where each work is located (including any on loan to institutions), reference to any recent valuations and noting whether each work is insured so your executors know exactly what you own and where it is.”
Valuing artwork for inheritance tax purposes can also present challenges and Laura stressed the need to get expert valuers on board who are used to answering questions from HMRC.
“The valuation exercise can be difficult depending on the type of work and the publicly available data on comparable sales when so much is sold privately.”
The article also explored the inheritance tax implications of gifting artwork during your lifetime. While giving away assets can reduce the value of a taxable estate, careful planning is required. As Laura explains:
“The key with such planning is to avoid the application of the gift with reservation of benefit rules. These are a set of anti-avoidance rules which apply where you give something away but still continue to benefit from it.”
Every collection is unique, and the legal, tax and practical considerations will often depend on the nature of the works involved and the collector’s wider objectives. At Forsters, we work closely with collectors, families, trustees and executors to help preserve collections and plan for their future ownership. If you would like to discuss any of the issues explored in this article, please contact Laura Neal.
With the rapid rise and growing daily use of generative AI tools such as ChatGPT, Claude and Copilot, it’s not surprising that its role is being discussed and debated in Family Governance circles. Families can use such technology to create in minutes seemingly comprehensive documents at the heart of their Family Governance planning, including a Family Constitution or Charter, or Family Shareholders’ Agreement.
This is powerful and can be genuinely valuable in creating efficiencies. But generative AI used in this way creates a misleading sense that effective governance can be reduced to drafting documents only.
In reality, Family Governance is a process, not a product.
Documents developed are simply the output. The real value for families lies in the process – the journey – that produces them. A well-structured and bespoke Family Constitution for example emerges from thoughtful, structured and human engagement and communication preceding it: discovering shared family values and principles, identifying and addressing differences and areas of tension, and building alignment and expectations across multiple generations. This process creates ownership, legitimacy and, ultimately, durability within the family in how they govern themselves, their business and wealth.
AI does not replace this. It responds to prompts and input, but it is unable to determine what should be asked. Effective Family Governance depends on families being asked the right questions at the right time in the right way; families rarely have the experience and objectivity to be able to do this themselves. They do not always identify the issues that matter most: business succession considerations (particularly between ownership and management), differing generational priorities and views on wealth, or disagreements and how to resolve them equitably.
Governance involves managing relationships, navigating sensitivities and building consensus, with appropriate legal structures supporting and underpinning such governance. Sitting behind all of this is the human dynamics and psychology of families that should be engaged with during the process. AI is indeed intelligent, but lacks emotional intelligence to be able to read the room, challenge constructively and facilitate open and honest dialogue; all important facets when guiding families through complex conversations about what their governance should look like.
Therefore, AI-generated documentation produced without going through the essential process of exploring all these areas may appear professional, but will ultimately be generic “best practice”, superficial and not tailored to the reality and dynamics of a particular family.
Used appropriately, AI can enhance – but not replace – the Family Governance process. For families, the key is to recognise that the strength of a governance framework lies not in how quickly it is produced, but in how thoughtfully it is developed. There is an opportunity with modern Family Governance to combine the efficiency of the technological opportunities presented by AI with the insight, experience and judgement of what is, and must be, an inherently human-led process. After all, governance is not about the document. It is about the family behind it.
