Art Collections and Estate Management

Fellow appraiser Claudia Hess, AAA sent me an interesting article on family dynamics, art collections and the division of property. Wealth Management reports on a family suing each other over a fine collection of fine art.

Wealth Management reports

New fuel has been added to the fire in what’s now a raging family feud involving art heiress Belinda Neumann-Donnelly and her family. Last year, Belinda and her father, art collector Hubert Neumann, made headlines after he unsuccessfully sued her in an attempt to stop the sale of a Basquiat work she had inherited from her late mother, Dolores O. Neumann (Hubert had claimed that Belinda unduly influenced Dolores to sign over the rights to the work in her name while Dolores was undergoing medical treatment).

The Basquiat, titled "Flesh and Spirit (1983)," went on to fetch $31 million at auction. Belinda, however, was seemingly unhappy with that result and slapped back at her father with a $100 million retaliatory lawsuit, alleging that he intentionally depressed the value of the painting and deterred potential buyers amidst the drama.

Now, with that lawsuit still pending, Belinda has also filed suit against her father and two sisters, Melissa, 49, and Kristina, 54, to force the sale of the 60 other jointly owned works, arguing that joint ownership is not plausible and asking the Manhattan Supreme Court to allow the sale and divide the proceeds “in accordance with the parties’ respective ownership interests.”

Forced Sale of Works

So, is the judge likely to toss out Belinda’s suit or does it actually stand its ground? According to Amanda DiChello, a trusts and estates litigator in Cozen O’Connor’s Private Client Services practice in Philadelphia who isn’t involved with the case, as far as recovering damages for tortious interference with prospective buyers, the burden would be on Belinda to prove that potential buyers, who may have been willing to pay more than what the work sold for, were scared away by Hubert’s antics. “Even with experts testifying that the work could have sold for higher and using past Basquiat sales as a benchmark as part of testimony,” Amanda continued, “isn’t concrete evidence and could be brushed off as mere speculation.” What may help build Belinda’s case is if the alleged recordings of Hubert admitting that he filed the lawsuit out of spite (which are mentioned in court documents) actually exist.

Better Planning?

Though DiChello feels that the lawyers handling Dolores’ estate seemed to have done a good job with the planning, including proper documentation to show ownership of the art (which helped to quickly dismiss Hubert’s claims), she thinks that, as estate planning professionals, “we should be asking ourselves during the administration process if there’s a better way to distribute these types of assets.” 

Tax and planning reasons aside, would there be any other (better) way to have made in kind distributions other than having the family members all be owners in common? Perhaps a parent may never anticipate (or want to anticipate) that her loving children will be embroiled in a vicious family feud, but should estate planners be advising that, unfortunately, more often than not, that’s a strong possibility? Even in cases where there’s no previous animosity, what happens, for example, when one joint owner needs liquidity and wants to sell while another wants to hold on to the works? If any such scenario could be predicted, maybe it’s best to divvy up who gets what in the planning stages, rather than tasking the court with the partition for sale, particularly in this case where so many works are involved. DiChello believes that the court will likely have a hard time here, as the other sisters may not want the works sold off, for one reason or another.

Source: Wealth Management

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