9 things you need to know before you lend your art

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Sometimes being an art collector means giving away

The public will see a work of art that they would never have seen if you had not loaned it to the museum.

Lending your art to a museum or gallery has many benefits. You can share your passion and art collection with the community, expand your contacts in the art world, and may even qualify for tax credits. It's also a great way to keep your art safe and taken care of if you don't have any more wall space.

Like most things, there are risks here too. Your art will travel and may be damaged in transit or fall into the hands of another person not protected by you. Understanding the benefits and risks associated with lending art will help you make an informed decision about whether it is the right decision for you and your art collection.

Consider These 9 Points When Giving Your Art to a Museum or Gallery

1. Prepare a comprehensive loan agreement

A loan agreement is your contract in which you identify yourself as the owner of the work of art and specify the details of the loan. Here you can enter the dates you agree to loan the work, location (i.e. borrower), title(s) and specific exhibit, if applicable.

You will also need the most recent estimates and status reports in the loan agreement. This ensures that you receive compensation in the event of damage or theft. If you have any display requirements, make sure they are also in ink. Loan insurance, usually provided by the museum, will also be specified in the loan agreement. Keep this agreement, along with any valuation documents and status reports, with your part(s) in your account so they do not get lost.

2. Get the right insurance

In addition to your personal fine art insurance, the museum must also provide a specific insurance plan. It should be door-to-door, also known as wall-to-wall. This means that the artwork is covered for any restorations or most recent appraisal from the time it leaves your home to the time it safely returns to your home.

Art Insurance Specialist Victoria Edwards talked to us about how you can get insurance coverage for loaning art. "You want to make sure there's door-to-door coverage," Edwards advised, "so when they pick up the painting from your home, it's covered on the way, at the museum, and back home." You must also ensure that you are listed as the beneficiary of any damages.

3. Do Due Diligence Before Submitting Your Art

As discussed above, any shipping damage must be covered by your insurance policy. However, a status report on each piece of art is mandatory before any piece of art of yours goes on the road. Thus, you are protected from any new damage. While this means that you will be reimbursed for any accidents, we have tips on how to avoid this situation altogether. Also be aware that UPS and FedEx insurance policies specifically exclude fine print art. Even if you buy insurance through them, it won't cover fine art.

We learned this from Derek Smith, President of AXIS Fine Art Installation, who is also an expert in shipping and storage. Consult with a restorer regarding packaging and shipping protocols for your particular type of artwork. “It's good to know every good conservative in the market,” continues Smith. They have experience in shipping and refurbishment, which means they know how to prevent product damage. "There's no way it can be restored to its former glory," admits Smith, so you must do whatever it takes to protect your collection.

4. Use it as a way to save on storage

Giving your art to a museum is usually free. If your art collection grows larger than you can show, you can borrow your art before setting up a storage space at home or paying a monthly storage bill. If you need to store art at home, learn more about it.

5. Consider it a donation and learning opportunity

While you are not donating your collection forever, remember that you are contributing to an exhibition that benefits the community. By lending your art to a museum, you are sharing your passion for art with the public. Also, this can be a great opportunity to learn more about your piece because the museum will provide scientific details. By being part of a particular exhibition or museum collection, the community can learn more about the artist you love, and you can learn something new too.

6. Explore possible tax breaks

You might be asking, "If it's a charitable donation, is there a tax credit?" It is worth consulting with a tax lawyer in each state about any possible tax relief for renting your art to a gallery. reported on an art sale hosted by a Nevada woman who recently purchased Francis Bacon's Three Studies by Lucian Freud triptych for a whopping $142 million. Incurring nearly $11 million in taxes, the buyer will be able to avoid those tax expenses because she lent the artwork to a museum in Oregon, a state that has no sales or use tax. The use tax will be explained in the next section.

As a lender, you should be informed of any tax credits you may wish to use and include them in the loan agreement.

7. Understand that you can pay taxes

In various states, some fine art objects may be subject to a "use tax" when they are leased to a gallery or used in some other way. For example, if the tax is not paid when the goods are purchased, then the use tax is due when the goods are delivered to Washington. The use tax in Washington State is the same rate as their sales tax, 6.5 percent, and is calculated based on the value of goods when they enter the state. This would be appropriate if you purchased fine art in California and would like to lend it to a museum or gallery in Washington DC.

Everything related to taxes will depend on the state. As a general rule, you should be aware that your art insurance representatives, attorneys, and the museum or borrower are responsible for notifying you of any possible tax credits or bills.

8. Protect yourself from seizures

You want to make sure that your art cannot be taken to court for any reason. This can happen in cases as simple as a dispute over ownership where a bill of sale is not available. Statute 22 of the United States protects objects of cultural significance or national interest from state confiscation. Any non-profit museum, cultural, or educational institution may apply to the US Department of State to determine whether a work of art or object is protected under Statute 22. This removes the object's immunity from legal process.

If you're lending your artwork overseas, make sure it's protected by a similar clause. Thus, it cannot be captured due to any confusion regarding its authenticity, owner, or other issues.

9. State your requirements

You are responsible and have the prerogative to set out any specific requests and requirements in the loan agreement. For example, whether you want your name to be displayed with the artwork, or where you would like it to appear in the museum. While contracts can be tedious, work with great attention to detail when drafting a loan agreement. We recommend starting with a wish list and concerns, and then consulting with your insurance agent or estate planning lawyer to make sure they are covered in the loan agreement as well as the points discussed in this post.

Loaning parts of your art collection is a great way to honor the community and share your love of art. Participating in museums will also put you in touch with their resources, conservators and curators, who can provide a ton of information when it comes to further defining and developing your art collection.

Find out more about the art professionals who can help build and protect your collection in our free eBook, now available for download.