Town and Country has an interesting article on the divorce of billionaire developer Harry Macklowe and his wife Lind and the disposition of their collection of postwar and contemporary art collection. According to the articles and also previous posts, the two sides are supposedly 100s of millions of dollars apart int he estimated value of the collection. The article also looks at dividing and valuing other important collections and divorce/separation proceeding, and notes the saying, "follow the money".
Town and Country reports
Adultery was the impetus for the divorce of billionaire real estate developer Harry Macklowe and his wife of 58 years, Linda. But in the Manhattan courtroom where the case unfolded this past fall, a younger, blonder, French third party was relegated to supporting player next to the real star of the drama: the Macklowes’ collection of postwar and contemporary art, which was worth, by some estimates, $1 billion.
Estimates is the key word. The Macklowes’ divorce lawyers were hundreds of millions of dollars apart as they bickered over appraisals of works by Picasso, Giacometti, Twombly, Rothko, and Warhol, and debated whether Linda, a trustee of both the Metropolitan Museum of Art and the Guggenheim, built the collection on her own. Harry argued that he too had a hand in it, quipping, “There’s nothing to catch the attention of an art dealer like writing a check.”
Legally speaking, art acquired during a marriage is no different from pots and pans.
The Macklowes’ case is just one current high-profile divorce that hinges on art. Robert Soros, son of billionaire George Soros, has been squabbling in court with his estranged wife, Melissa Schiff Soros, over a Christopher Wool word painting (which proclaims, “FOOL”), and in recent years there have been bitter splits between artist George Condo and his wife Anna, and between gallerists Nathalie Karg and Anton Kern, son of famed painter Georg Baselitz. In the latter case the judge threw out a prenup written in German, because Karg could not understand it when she was coaxed into signing it.
Such heated disputes come as no surprise to leading divorce lawyers. As the value of artworks has skyrocketed, it stands to reason that their disposition has become more difficult. “For collectors, art can be even more valuable than the home in which it’s hanging,” says Karen Krehbiel, a Chicago lawyer who has represented billionaire Kenneth Griffin, a major collector of Abstract Expressionism.
Legally speaking, art acquired during a marriage is “no different from pots and pans,” according to New York divorce lawyer Bernard Clair. If the warring parties cannot agree on an equitable distribution, one obvious option is to hire appraisers to then haggle over the division. It’s a subjective process, as evidenced by the Macklowes, and one that is often “hotly litigated,” says lawyer Brett Ward, who recalls one case dragging on for years. “Art valuation is crap,” says Clair, who represents Melissa Schiff Soros. “The only way to determine value is to sell it.”
For art lovers who want to keep their collections intact and in their possession, rule number one, lawyers agree, is to put them in the prenup. Prenups have long been used to protect artworks that one spouse already owns or stands to inherit, but lawyers say people are increasingly writing provisions that establish a framework for dividing art acquired during their marriages.
Regardless of whether a prenup exists, Krehbiel advises clients to keep detailed records, especially of the method of payment. “The most important part of a bill of sale is not necessarily the buyer,” she says. “You have to go to the source of funds.” If the check was written from a joint account, both parties might have a claim, but if non-marital funds were used, it could be a different story.
Even then, the law is not clear-cut, according to Clair, who set precedent in New York with the Soros case. The couple signed a prenup before their 22-year marriage, but it did not specifically address the disposition of artworks. Robert’s lawyer maintained that his client’s name alone appeared on the bills of sale for four paintings estimated to be worth $22 million, but Clair won on appeal, arguing that invoices are not reliable documents. As of press time, the couple were still duking it out.
Negotiations can get even messier when one of the spouses is an artist or an art dealer, as the personal and business holdings of people in those fields are often hard to distinguish. Clair represented Jocelyne Wildenstein in her multibillion-dollar 1999 divorce from megadealer Alec Wildenstein. “There was a question of whether the business owned art, whether one or both spouses owned art, whether art had been gifted during the marriage,” which would make it marital property in the state of New York, Clair says. (The disposition is confidential.)
Even the best prenup can overlook a scenario or two. What happens, for instance, when a couple’s name is plastered on a museum gallery or wing, and then the couple split up? During his marriage, Griffin, a hedge fund mogul, gave the Art Institute of Chicago $19 million toward Renzo Piano’s stunning Modern Wing, and the museum christened the soaring entry atrium the Kenneth and Anne Griffin Court. After the couple’s hostile 2015 divorce, the Art Institute quietly renamed the space Griffin Court.
In such cases, lawyers say, follow the money. If the donation came from non-marital funds, the paying partner will probably prevail. If a dispute over art does go to trial, spouses can try to demonstrate sentimental attachment, but they may not sway the judge. For his part, Clair argues that art is not the same as a Maserati or a penthouse. “I’m still old-fashioned enough to believe art represents the best part of us,” he says. “To denigrate art from something that was loved in the marriage to dollars and cents is a tragedy.”
Source: Town and Country
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