Dividing Art in Contentious Times

During divorce proceedings or when a family member leaves behind a large estate, some of the most contentious fights that erupt are over the artwork.  “I’d put it in the same category as child-custody battles,” says family attorney Suzanne Landers.  “It takes far longer to decide who gets what painting or sculpture than it does to divvy up houses, cars or even money.” 

However, there are a few basic principles on how to decide (peaceably and equitably) who gets what.  For divorcing couples, the first step is to develop a detailed list of all the art bought before and during the marriage.  Art bought or obtained before the marriage, or acquired after the couple has separated or filed for divorce is not considered marital property and belongs to the same spouse who purchased it originally.   It may also be a good idea for couples to hire an appraiser.  Artworks may then be divided equally by value, or other assets can be made part of the bargaining—the house, the vacation home, etc. 

Decisions about art should be ingrained within the estate planning process.  Like houses, art that passes at death receives a step-up in value for tax purposes.  Sometimes collectors will sell art to help cover the cost of estate taxes.  By placing the art in a tax-exempt charitable remainder unitrust, the collector can receive distributions from the sale for the rest of his or her life, taxable as ordinary income, allowing the collector to avoid a 28 percent capital-gains tax.  When the collector dies, remaining distributions go to a designated charity.  If an art collection is donated to a nonprofit, the gift can be made all at once or in installments. 

See Daniel Grant, Tips for Dividing Art in a Divorce or Death, The Wall Street Journal, Sept. 21, 2014. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.