Assets such as fine art and collectibles may represent a sizable portion of a family’s wealth. However, these assets often require specialized knowledge to manage effectively and incorporate into a broader financial plan that recognizes their value.
Robyn McCallum, director, art and collectibles, Scotia Wealth Management, heads up the firm’s new Art & Collectibles Advisory program, designed to integrate valuable collections into wealth, estate and legacy plans in a tax-efficient and financially prudent way.
Here, McCallum talks about “passion assets” and the complexities of art and collectibles when it comes to taxation, philanthropy and inheritance.
How did you prepare for this role with the Art & Collectibles Advisory program?
My background bridges both the art world and wealth management. I’ve spent the majority of my career working with major corporate and private art collections—advising on acquisitions, collection management and cultural strategy—but always working closely with legal, tax and philanthropic specialists. Earlier in my tenure at Scotiabank, I also completed a year-long placement in risk management, which helped me build a foundation for financial oversight of complex assets.
What was the rationale for launching the new service?
Increasingly, collectors are recognizing that their art and collectibles represent quite a meaningful share of their overall net worth. They want to treat those assets with the same strategic intention as their financial portfolios across the life cycle of ownership. We’re also seeing a move away from viewing collections purely as an expression of passion and personal identity. There’s a growing understanding that these objects carry significant financial, tax and legacy implications. It enhances our total wealth offering by recognizing that these assets that clients care about are not always listed on a brokerage statement. This new service will be layered into our Total Wealth approach, a unique team-based approach that includes creating a financial plan, having multiple touchpoints and bringing the solutions our clients need to the conversation.
You refer to these items as ‘passion assets.’ Why?
I think it’s a fitting term because the main differentiator is that there’s an additional layer at play here. There’s an emotional and cultural value on top of the financial value.
What sort of passion assets would Scotia Wealth Management consider under that umbrella?
The list isn’t comprehensive, and the types of assets we deal with depend on the client’s goals and desires to incorporate them into a financial plan.
The program offers assistance with the stewardship of these items. How does this benefit clients?
Many of these items have carrying costs inherent in owning them. Artwork may involve conservation costs. The type of classic cars that we’re dealing with, for example, must be treated with a particular standard of care specific to those types of assets. They’re typically warehoused, and they have to be maintained and driven on a regular schedule.
In my previous role as a curator, [I found that] people could also be very passionate about art, but they didn’t always have the administrative rigour around owning it. When you’re planning your estate, things that were not accounted for throughout ownership can present huge issues. Even considerations as simple as a lack of proper documentation can create huge issues with insurance coverage. You need a certain amount of expertise, and that’s where we’re offering to step in.
What are some of the possible implications of donating valuable collectibles?
Tax implications can stretch across the whole life cycle of ownership. Are you holding these items in a trust or through a corporation? Philanthropy may also raise tax implications. There are different ways you can donate artwork in Canada. You can give a straight gift, or you can go through something called the Canadian Cultural Property Expert Review Board, which certifies cultural property for income tax purposes and encourages donations to public collections. We’ve also found that some institutions are very selective about the donations they’ll receive and have their own acceptance criteria. There’s just a lot of nuance you need to plan for, and these conversations should happen now, while we can navigate them for our clients.
What about the complexities of passing on artwork as a family legacy?
Transferring art and collectibles or passion assets is fundamentally different from transferring traditional assets, because these items are not standardized, liquid or easily divisible. Unlike a portfolio of securities, some collectibles are not ones you can split among the heirs. Determining fair value, including emotional value, can also be highly subjective. Even something like an unexpected estate tax could force the sale of these assets, which can be particularly painful. Thoughtful planning in this regard helps families navigate those conversations with clarity and fairness.
If a client wants to arrange a loan against collateral such as artwork, what is the process?
Appraisal and fair market value determination is an important part of it, but it’s only one component. For example, we tend not to loan against single pieces of art—we prefer collections of work. Different covenants come into play around any sort of loan, whether it’s secured by artwork or anything else, and it gets negotiated like any other loan.
How do you integrate the ownership of passion assets into a portfolio, philanthropy or estate plan?
We operate as a collaborative service model, where we work closely with specialists within wealth management, estate and trust, philanthropy, insurance, risk management, credit, legal and tax counsel, independent third-party appraisers, art conservators, or even cultural institutions where appropriate. By combining institutional expertise and sector-specific knowledge, we can ensure that our clients receive advice that’s financially sound, but also emotionally and culturally informed.
Peter Kenter is a Toronto-based writer with a deep and abiding interest in how everything in the world works and how it got that way. He’s written about the economy, investing, financial services, cryptocurrency, pharmaceuticals, mining, energy, cannabis, agriculture, consumer electronics, education, sponsorship marketing, and entertainment. He’s the author of TV North: Everything You Wanted to Know About Canadian Television. He loves English bull terriers.
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