Up to date valuations of works of art are important in the context of estate planning. They are also important for the purposes of protecting works of art with proper insurance.

Inaccurate valuations, whether excessively high or excessively low, may create problems in the future. Written valuations for most purposes can be arranged by Timothy Sammons Limited.

1. Inheritance Tax (IHT)

On a person's death he is deemed to make a transfer of all his property (including cash) on which, subject to any available reliefs or exemptions, there is an IHT charge. The charge is calculated by reference to the open market values at the date of death of all the assets in his estate. The Revenue treat prices realised at public auctions as being suitable evidence of open market values, but such sales are by no means the only evidence available or accepted by the Revenue.

A valuation during lifetime showing the open market value will give an indication of the potential tax liability on death, and can be used for estate planning purposes. This will have to be updated for probate purposes on death.

If, however, no valuation has been prepared during lifetime, a valuation will be necessary reflecting the open market values as at the date of death.

It may also be helpful to obtain valuations when lifetime gifts are made, even if no IHT is immediately payable. For example, if the donor dies within 7 years of making a PET, tax would be chargeable in relation to the open market value of the asset when the PET was made.

2. Capital Gains Tax (CGT)

If there is a transfer or disposal of chattels during lifetime, it may be necessary to obtain a valuation for CGT purposes in addition to the current open market values for IHT purposes.

3. Insurance

The usual value placed on an item for insurance purposes is the retail replacement value. This tends to be higher than the open market value (auction value). However, it may be that an owner decides to insure at a different level, agreed with his broker.