More than 60 per cent of collectors planning to pass down their art collections haven’t had a meaningful conversation with their heirs, according to a recent report.Attila Barabas/iStockPhoto / Getty Images
Underneath the great wealth transfer, a quieter transition is unfolding. According to Deloitte’s 2025 Art & Finance Report, almost US$1-trillion in art and collectibles is expected to be transferred globally between 2024 and 2034, and most families aren’t prepared.
More than 60 per cent of collectors planning to pass down their art collections haven’t had a meaningful conversation with their heirs, the report said.
That communication gap matters because collectibles are not the same as securities. Publicly traded investments offer continuous price discovery and liquidity, they’re easy to divide, and ownership is largely transactional and emotionally neutral. Collectibles are the opposite. They’re illiquid, difficult to value, hard to sell, and they often carry significant emotional meaning and personal history.
As a result, collectibles complicate estate plans and can create disputes between family members.
Advisors can play an important role in preventing that tension from forming. Their value lies in knowing when and how to bring in the right professionals – including appraisers, specialty insurers, estate lawyers, and tax professionals – to ensure collections are understood, protected and integrated into an overall wealth and estate plan. Advisors can encourage clients to take the following steps:
- Appraise: Professional appraisals provide an accurate valuation, which is essential for insurance, tax planning and fair distribution to heirs. Regular updates are important, as values can change meaningfully.
- Insure: High-value items are often not covered under standard home insurance policies. Collections should be reviewed with a specialty insurer.
- Store: Proper storage is key to preserving value, particularly for wine, art and other collectibles that require climate-controlled conditions.
- Document: Maintaining a clear inventory of each item’s ownership, location and appraised value brings structure to collections and eases the burden on executors and heirs.
Liquidity and estate planning
The illiquid nature of art and collectibles is an important consideration in estate planning. Unlike selling a share of Apple Inc., there’s no public market to provide immediate liquidity. An estate must rely on an auction house or broker to facilitate a sale.
Even then, finding a buyer is not guaranteed. Sales can take time, and adverse market conditions can lead to assets selling for less than expected, particularly if there’s time pressure.
For clients with sizable collections, liquidity planning is critical. When someone dies, they’re deemed to have disposed of all capital property at their fair market value immediately before death. This deemed disposition triggers a taxable capital gain if the current market value exceeds the cost.
When there isn’t enough liquidity to cover tax liabilities, families may be forced to sell other assets or accept unfavourable terms on sale to meet estate obligations. Planning ahead and considering strategies such as life insurance can help ensure tax obligations are met without putting unnecessary pressure on the estate.
Generational differences
A common mistake collectors make is assuming the next generation will want the collection. In reality, heirs may have different tastes or little interest in bearing the cost and responsibility.
If heirs don’t want the collection, charitable donations made by an estate can be applied against up to 100 per cent of net income in the year of death, which can offset taxes triggered meaningfully. By contrast, donation tax credits claimed during a client’s lifetime are generally limited to 75 per cent of net income in a given year.
In either case, clear planning allows donations to be structured and executed at the estate or donor level, where they are typically more tax-efficient than if heirs were to inherit the assets and donate them later.
Dividing collections, not families
While professional valuations are essential to ensure assets can be divided fairly, collectibles often carry emotional value, too. What feels like a practical decision on paper may be perceived as favouritism by heirs. There’s no single approach to dividing collections fairly.
Some families use a lottery system to determine the order in which heirs select items. Others assign each child a pool of “estate dollars” to balance personal preference with financial fairness. The right approach depends on family dynamics, liquidity needs and the significance attached to the assets.
That’s why helping clients manage their collections is less about market insight or art expertise and more about stewardship.
Sascha Isaacs is senior portfolio manager and senior wealth advisor, Family Office Wealth Counsel, at Richardson Wealth Ltd. in Toronto.