Art FinanceArt Lending

Ramsay Slugg, U.S. Trust: Estate planning & Art lending

Art lending is a core lending product for U.S. Trust, now part of Bank of America, which was founded back in 1853. But Ramsay Slugg, managing director and wealth strategist at U.S. Trust, who has expertise in art planning, says they are seeing an increase in demand.

Slugg says. “Lending against a client’s art collection allows forthem to gain collateral without selling works, avoiding having to pay the expensive taxes and rates that come hand in hand with selling.”

Slugg says there are many reasons why people take out an art loan. “We have seen people lend against their collections to raise funds for anything from a business deal to real estate development. In some cases it can actually be easier to lend against an art collection than to get a complicated property loan” he adds. “Mainly we see people borrowing money to invest in other assets: to get a line of credit or to enable other financing. Generally clients lending against their collection are not doing so to buy more art.”

“With traditional banks and auction houses increasing their financing services, and even some hedge funds, there is a growing trend towards more art lending. Where the value of art has gone up, the market place has become more transparent. People who were seeing their collection from a purely aesthetic perspective are now appreciating its financial value.”

Overall planning

The U.S. Trust looks at a client’s entire portfolio of assets that needs to be looked after. He adds: “What’s different about the U.S. Trust is our lending and planning capabilities. We don’t just work on a single transaction; it’s more about the overall planning.”

When offering loans against a collection, the bank prefers to work with established collectors with a sizable collection. There are a number of categories of art that they lend against, but they do not cover ‘collectibles’. They prefer to lend against Old Masters, and Impressionist, Modernist, Contemporary, Post-War, Asian and American art. “Because we lend against a collection and not just one paintingit allows us some diversity,” Slugg says.

He adds: “There is no minimum size for a loan, but our advanced rate is 50% of the collection, so for a $20 million collection we would lend up to $10 million.”

U.S. Trust also allows borrowers to remain in possession of their artworks. “We protect ourselves and the asset by using a UCC1 filing, which allows the owners to keep the work in their homes or include it in any planned exhibitions − with the one restriction that the work must not leave the US.”

“We aren’t looking to take the art as repayment. We don’t want the client to default and to be left with the work of art, which we would then have to sell.”

“Art is the most difficult asset to do estate planning for.”

U.S. Trust is not just a lender and Slugg enjoys helping clients plan the disposal of their art collections. He advises clients across three main strategies for estate planning: selling the collection, gifting it to a non-charitable beneficiary or donating it to a charitable organisation.

Slugg says: “Our job is to help educate clients on estate planning through consultation and advice. Art is the most difficult asset to do estate planning for.” This, he says, is because art is a passionate asset and can be seen as illiquid when looking for cash flow.

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Rebecca Hawkins

Rebecca Hawkins

Rebecca's passion for the visual arts started at a early age so studying a BA (Hons) in History & Philosophy of Art was a natural progression. A keen artist she has also completed a Fine Art Foundation to develop her own artistic practice. Rebecca has recently started writing features for Private Art Investor. Please feel free to contact Rebecca on +44 1737 245 564 or at if you are interested in arranging an interview.