Article on How War Affects Art Estates

Robert L. Moshman, recently published an article entitled,  Monuments Men Face Monumental Tasks: War and Exotic Issues Affect Art Estates, The Estate Analyst, October 2014. Provided below is the introduction to the article:

Another good-for-nothing war has taken hold of the Middle East. The Islamic State of Iraq and Syria (ISIS) has captured headlines and cities, beheaded hostages (whilst incongruously exploiting social media), and committed atrocities with a terror army. Yet, in spite of the unusual aspects of ISIS, it has something in common with other armies that have waged wars the world over throughout history: the looting of art.

It can take generations to locate, identify, and restore art to its rightful owners. Sometimes it is simply impossible. For estate planners, art that has clouded ownership or which quite possibly cannot be sold presents a dilemma. Is the artwork’s value for tax purposes to be determined by the black market? That unexpected gem of an idea was suggested by the IRS in a recent case involving a Rauschenberg work of art.

How does artwork of dubious title or marketability affect the distribution of other assets of an estate? Must the estate insure the work for its value in the hands of the rightful owner or for its limited value in the estate’s possession? What level of due diligence will protect the executor and estate’s attorney from liability to beneficiaries?

Some of those questions can only be posed rhetorically because no one has good answers—especially not the IRS. Here, we review a variety of recent cases involving art and report on the current status of the Monuments Men, i.e., the agency that continues to reunite art with its owners.