Art world abuzz over auction of ex-spouses’ one-of-a-kind art collection.
New York is an equitable distribution state, which means that marital property as well as marital debt is divided between divorcing parties equitably - with an emphasis on fairness, rather than just a 50-50 split. It is crucial that when wealthy people divorce, their assets, which are often luxury items with subjective values, receive careful analysis by professionals with specific experience with valuation of the type of property at issue.
You cannot divide a high asset estate fairly without having reasonable values for complex assets like residences, business interests, overseas assets, antiques, collectible vehicles, yachts and boats, aircraft and artwork.
A recent high-profile New York divorce that is still winding down the property division portion of the split has been widely in the media. On Oct. 30, 2019, The New York Times published an article about the divorce of Harry and Linda Macklowe. At issue? Their $1 billion fine art collection of paintings and sculpture that includes more than 150 works of Picasso, Koons, Rothko, de Kooning and other famous artists.
The couple was married almost 60 years and are both in their early 80s. He is a real estate mogul; she an art patron.
Each party reportedly has hired their own art appraisers, who do not always agree on proper valuation. One piece that they agreed on was $50 million for a Warhol.
Harry's expert valued the collection at $788 million; Linda's at $625 million. An earlier insurance appraisal by Christie's assigned a value of $937.5 million.
According to the Times, state courts have mainly handled the property division, suggesting that they were unable to negotiate a comprehensive settlement dividing it themselves. Linda reportedly wanted to keep some art and sell it as needed with Harry paying the taxes, but a judge in the New York Supreme Court has ordered the collection sold. She will appoint a receiver to handle the art sale, which will likely be through one of the elite auction houses.
The judge was not comfortable averaging the values of the two parties' appraisals because of disparities and the appeals court did not agree with Linda's proposal to use a neutral expert appraiser. The appellate court also urged the matter be wrapped up, given the parties' ages.
The Times said that a lawyer for Linda told an appellate court that the art needed to be sold because they need cash "to sustain their lifestyle." He said that "60 to 75 percent of their assets" were invested in art.
While few marital estates will rival that of the Macklowe's, many divorcing couples own significant, highly valued luxury items that require careful examination and appraisal. Divorcing parties and their attorneys must take great care to identify and retain appropriate, respected experts. Only with realistic valuation will a fair division between the spouses be possible.
The family lawyers at Daniella Levi & Associates, P.C., with offices in Queens, Manhattan and the Bronx represent people in complex, high asset divorces in New York City and throughout the state.