INDIA Law and Practice Contributed by: Roshnek Dhalla, Bijal Ajinkya, Moin Ladha and Shailendra Bhandare, Khaitan & Co
tinent. Depending on the commercial objectives of the testator, several modes of succession may be put in place for generational transfer of artworks, as follows. Under a Gift While not a typical and generally adopted mode of succession, gifting the artwork to the intended recipi - ent is a possibility. It is simple and convenient as the gift can be made by mere physical delivery and be recorded by way of a letter (or similar instrument), which requires no registration or other formalities. However, the key consideration is that one parts with the assets during one’s lifetime itself. Further, once the asset is gifted, the ownership passes, and hence one is unable to subsequently reverse the gift or trans - fer it to someone else. Gifting of artworks may also entail certain tax implications, as discussed in 10.3 Tax Implications of Artwork Gifts and Donations . Under a Will This is the practice most commonly adopted by individuals, wherein the will lays down the intended beneficiary of each of the individual’s assets. Unlike a gift, the will enables the testator to enjoy owner - ship of the asset during their lifetime. Further, wills are private documents and can be changed numerous times, thereby providing flexibility to the testator in naming the intended heirs. However, even this mode of succession might not be fool-proof, as a will is sus - ceptible to challenges; furthermore, it may also bring administrative challenges such as unclear instruc - tions, carrying out valuations, obtaining probate, etc. Lastly, a will does not achieve any asset protection objectives and also leaves the artwork susceptible to a potential estate duty, if re-introduced in India. Private Trusts A more sophisticated manner of succession, a trust is an extremely flexible arrangement that can be structured to meet the tailored objectives of different individuals. It separates legal and beneficial owner - ship, thereby allowing one to retain control during one’s lifetime (potentially in the capacity of a trustee of the trust), while also ensuring that the beneficiaries are identified as per their wishes. Further, given that transfers into a trust occur during one’s lifetime, they are not susceptible to the challenges and administra -
tive inconveniences of a will. If structured optimally, trusts not only provide tax neutrality but also provide sufficient asset protection and protection from any potential estate duty, if re-introduced in India. In the context of artworks – especially family heir - looms or any generational art pieces – it would often be the wish of the family that the future generations preserve such artworks and carry on the family’s legacy for generations. Such objectives can only be achieved through a trust structure wherein the wishes of the settlor (made as part of the trust document) can place restrictions or prescribe guidelines on the preservation and maintenance of the artworks within the family. Such structure can also prescribe rules and by-laws regarding any commercial activities that may be undertaken in respect of such artwork, including public displays, donation to any museums and so on. In recent times, there has also been a growing trend of families institutionalising their art collections by settling them into charitable structures, such as pri - vate museums or foundations, where the artworks are placed on public display. These structures are often complemented by parallel commercial activities, such as curated exhibitions, guided tours, cafés and gift shops, thereby creating a sustainable ecosystem around the collection. Such an approach not only enables wider public engagement but also allows the family to retain strategic oversight through trusteeship or governance roles, while ensuring that the collection remains consolidated within a single entity dedicated to its preservation. Additionally, housing the collection within a charitable framework may offer further advan - tages from an estate planning perspective, including potential insulation from estate duty and continuity of legacy beyond individual ownership. Family Arrangements While not a usual mode of succession, the importance of family arrangements cannot be overstated, espe - cially in cases of artworks that may have remained with families for generations. With such ancestral properties, there is often lack of clarity regarding the title and ownership of assets, which results in inevita - ble disputes among the later generations.
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