"As crazy as debating over what pieces of artwork might be worth like Johnny Depp and Amber Heard, it’s financially smart to understand what your assets are worth and how you can hold onto as many of them as possible during a divorce."
Art is in the eye of the beholder, but in some situations, the beholder is amidst of a divorce with an ex-spouse who also is eyeing the art in their settlement. The creative expression of the medium speaks to the emotions that individuals go through on a day-to-day basis and can be a source of comfort in one’s living space. That’s all the more reason many individuals experiencing a divorce seek out pieces of art in their divorce settlements; that, and their monetary value.
This type of settlement calls upon the state’s status as an equitable distribution state or a community property state. Because most states are equitable distribution states, it would be beneficial to seek the value of the art, as both individual pieces and as a collection, beforehand. This act requires an art appraiser.
All art appraisers are not created equal, according to a New York lawyer quoted in the New York Times. Like any profession, they come in a variety of proficiencies with different qualifications to meet the needs of their customers. Lawyers can often give referrals, or you can research an appraiser yourself that specializes in the specific art you own.
During a divorce, each party may consider hiring different art appraisers to value the collection. If appraisers are far apart, parties often find themselves splitting the difference, or at least taking the differences into account when negotiating.
The value of an asset surfaces during negotiations, and art is no exception. It, too, is used as a bargaining chip, alongside primary custody of the children, the car, the house, the pet, etc. It all depends on what is considered more valuable to you and what is in your best interests moving forward.
Pricing information can be available on online sites, but the appraisals can offer a lot of assistance on the tax-side of things. The Internal Revenue Service has specific requirements for appraisals submitted as documentation for donations and requires a written appraisal by a qualified appraiser for any deduction taken on items valued at more than $5,000.
An inventory needs to be taken, according to The Wall Street Journal. Hiding artwork or not disclosing relevant documents regarding the artwork could lead to lawsuits. This could lead to an ex-spouse getting 75 percent or even all of the artwork.
A case for mediation
Mediation can create the dialogue necessary to divvy up the pieces of art in a divorce, but sometimes, outside elements create problems in the litigation. In the divorce of Christopher Larson, a retired Microsoft executive and co-owner of the Seattle Mariners, and Julia Calhoun, there was a piece of art, “Richmond Hill in the Summer of 1862,” a 19th Century American landscape painting by Jasper Francis Cropsey. She didn’t want the painting, and he wanted. It sounds simple enough.
However, it was hanging in their London home, a home that Calhoun would get in the divorce, and England was very animate in it not leaving the country. They required an export license, and the courts ultimately gave Calhoun the painting she wanted the least, due to the complications in England. After the decision was rendered, the two ex-spouses did some art trading, each getting what they wanted in the end.
The Larson/Calhoun divorce also is another example in using art as a bargaining chip in pursuing financial security. Larson claimed that he needed the artwork to secure a line of credit with JPMorgan Chase and that the bank would only count paintings worth $750,000 or more.
Asset value and estate planning
Not only does divorce happen for an art owner, it happens to an artist, as well. The division of property, including the artwork, applies for everything created during the marriage. However, any art created before the marriage or after the separation does not count as marital property, according to The Huffington Post.
Art commission payments agreed on before the marriage or licensing agreements that arrived after the wedding also are excluded from the debated assets. Many artists, such as Charles M. Schultz and Jerry Lewis, also have included future revenue in their divorce settlements.
Estate planning also comes into play when figuring out art in a divorce. Wills often include the art and collection in them, so when an individual is divorced, the will needs to be modified. Additionally, all of the pieces of art that you obtain in the divorce need to be accounted for in the modified estate planning, or else, you are at risk for an ex-spouse showing up after you die and collecting pieces of art. While that behavior is socially more understandable, it also is a criminal offense that can result in jail time.
As much as the idea of debating artwork in a divorce sounds like an idea that is rooted in the wealthy of high society celebrity, it still is a good idea to keep a running inventory on any and all assets that could potentially be monetarily or emotionally worth something. It also can give you bargaining power in any other negotiations. As crazy as debating over what pieces of artwork might be worth like Johnny Depp and Amber Heard, it’s financially smart to understand what your assets are worth and how you can hold onto as many of them as possible during a divorce.