The challenges of dividing art between spouses in a New York divorce

Significant wealth can be at issue and appropriate valuation elusive.

One of the most important outcomes of divorce is the property division between the spouses. When the marriage is one of significant means, the assets tend to be more numerous, valuable and complex.

Art collections

A valuable art collection can make a high-asset divorce more complicated and sometimes, more contentious. Works of art may be paintings by famous artists - antique or modern - sculpture, photography, primitive or folk art, ceramics, glass, prints, drawings, aboriginal art, art produced within a particular cultural tradition and other types.

Equitable distribution

New York law directs that marital property (as well as debt) be equitably distributed between divorcing spouses. Equitable distribution does not necessarily mean that marital property is divided 50-50, but that it be fairly divided under the circumstances.

If the couple had signed a valid prenuptial or postnuptial agreement that specified how art ownership (or assets in general, including artworks) would be resolved in case of divorce, the agreement would control.

Property is either separate (including that owned by one spouse before marriage or received by only one spouse as gift or inheritance, with some exception) or marital, meaning everything else amassed during the marriage, whoever earned or bought it, again with some exception.

If artwork is separate property, it would remain the property of the spouse who owns it. If art is marital, a value must be assigned and ownership determined as part of the overall equitable distribution of marital property.

Notably, divorcing spouses may negotiate a marital settlement agreement (through their lawyers or using an alternative dispute resolution method like mediation or arbitration) in which they decide together how art will be divided. They could decide who will get specific pieces or agree to sell certain items and divide proceeds, for example.

If the parties cannot agree, the judge in the divorce will assign art ownership as part of the equitable distribution of the marital property as directed by statute, which says to consider the "circumstances of the case and of the respective parties."

The statute also directs the judge to consider 14 specific factors like the parties' ages and health, the marriage length, the liquidity of assets, the "probable future financial circumstances" of each, alimony awarded and other factors, including anything the judge finds "just and proper."

Valuation is key

To negotiate knowledgeably or to present evidence of value in court, artworks need to be carefully appraised. This may not always be an easy or clear question for a piece of art. For example:

  • Which kind of value should be used: fair market value, insurance, replacement, retail, auction or wholesale?
  • Who is a proper appraiser: auctioneer, art dealer, gallery owner, art historian, specialist in the particular type of art or appraiser with specific educational background in art valuation?
  • Are there records of purchase price or previous appraisals?
  • What source of funds was used to buy it?

The parties may be able to agree to a particular appraiser or two appraisers for comparison. Otherwise, they are likely to present dueling experts in court for the judge to decide appropriate value.

Any New Yorker facing potential divorce who has artwork or other valuable collectible assets like antiques, rare books, rare automobiles, fine jewelry or similar items should seek advice from a lawyer with specific experience in high-net-worth divorces. Such a lawyer will have experience with valuation and familiarity with specialists, appraisers and experts who can assist.

The experienced attorneys at Arnel Law Firm in Brooklyn represent clients in the five boroughs of New York City and throughout surrounding counties in high-asset divorce proceedings. Senior partner Curt Arnel is also a trained and licensed Certified Public Accountant or CPA, adept at dealing with high-asset divorce cases and very knowledgeable about related financial matters.