Collections held in Trust

Classic cars, fine art, antiques and books are possibly the things that come to mind when we mention collectables. Building a collection of valuable items involves time and dedication, as well as a sizeable financial investment.

More often than not, there is a significant emotional attachment to one’s collection. The time spent in researching and then finding the wanted items is priceless. Furthermore, the ultimate purchase of a collectable item can be rather costly. Moreover, in terms of value, the size of the collection of valuable items also contributes towards its financial worth, adding to it a value that is not simply equal to the value of the individual items. An added intrinsic value lies in the collection itself over and above the value of the individual items. In fact collectables have become a diversified investment type, used as a means of preserving wealth, and also passing it down the generations.

The personal nature of collectable items on the one hand and the potential significant value thereof on the other, make it paramount for the owner of such a collection to plan what it to happen to the collection on his demise.

It is safe to say that one’s heirs may not share one’s same passions, or they may not have the necessary maturity and knowledge to manage such collectables on one’s demise therefore, one risks having a valuable collection going to waste, as it is not properly appreciated and taken care of, with its value being dissipated.

How can collections be protected and managed for years to come?

Having such collections held in Trust can be an effective answer. A Trust has a longevity that can last up to 125 years and the Trust Deed can be formulated in such a way that ensures that the settlor’s wishes with regards to such collectable items and the manner in which these are to be managed, are duly implemented by the Trustees even following his demise.

The options on how to manage such collections will vary depending on the nature of the collections as well as on the wishes of the settlor. Some practical examples on what can be done with the collection while in trust include the following:

  • Donating or loaning the assets to specific Museums;
  • Selling the collection to museums or auctions with the proceeds to be divided between the heirs;
  • Derive income from the collection which can be used for an expressed wish (e.g. the promotion of upcoming artists);
  • Donating the assets to the heirs in an organised manner and subject to certain conditions as imposed by the settlor.

In managing and administering the collectable items, the Trustee would always follow the terms set out in the Trust deed, which would have been drafted in accordance to the wishes of the Settlor. Being such a highly specialised area, the Trustees would typically appoint professional experts in the specific area. Depending on the desired outcome for the collections, the Trustees would use the experts’ advice, on how to preserve and protect the assets and manage these in accordance with the wishes of the settlor,

What is the process and how would it work should a collection be settled in Trust?

There are different ways in which to structure such an arrangement. Typically the first step is to approach professional trustees to discuss the collectible items and the manner in which one would like them to be managed and distributed. A Trust Deed is drawn up and executed on the basis of the settlor’s intentions. The relevant collectables are then transferred to the name of the Trustees to hold them on Trust as per the Trust Deed. Typically, during the settlor’s lifetime the settlor will retain the use and enjoyment of these items, as well as, the right to give directions to the Trustees on the management of such assets. Once the settlor passes away or is in no capacity to give directions, or simply reaches an age at which he prefers to take a step-back; the Trustees will take a bigger role in the management of such assets, always and solely in accordance with the terms of the Trust Deed.