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Division of assets of fine art in divorce proves difficult

Florida couples with significant assets sometimes do not consider how those assets should be divided in the event that their union does not work out. Couples considering dissolution of marriage should be aware that some assets are easier to divide than others.

Fine art, in particular, can be challenging to divide. In a recent divorce involving a retired software executive and his now ex-wife, the couple's art valued at $102 million had to be split up. The artwork included 43 paintings and four other pieces. John Singer Sargent, William Merrit Chase, Claude Monet and other artists were represented in the collection.

High asset divorces often require a complex process for the division of assets. In this case, the couple did not have much of a problem dividing cars, houses and collectibles. Dividing the artwork, however, proved especially difficult.

The couple tried repeatedly, and unsuccessfully, to divide the artwork themselves so that each party would have about $51 million worth of work from the collection. Finally, the question had to come before a judge.

Simply liquidating the collection was not an option. It would have compromised the value of the collection significantly. At a 28 percent rate, fine art is more heavily taxed on any rise in value between purchase and sale than most other assets. Sellers qualified to market such a collection also take a large portion of the sale price as a commission. The couple's collection had sentimental value and was also so voluminous that experts feared its entry into the market would negatively affect the value of other fine art from the same time period.

Another issue stemmed from the fact that some of the artwork was particularly well suited to the place it was physically located. One piece in a London house the couple owned could not easily be moved to the United States because of the historical significance it held for the United Kingdom.

Ultimately, a judge was successful in dividing the collection according to the priorities set by the couple but nonetheless the two traded some pieces back and forth after the order.

This case shows complex property divisions require creativity. Where significant assets are at stake, often the challenge is getting the division right rather than overemphasizing an equal split.

Source: The Seattle Times, "The art of divorce: She gets the Monet, he gets the Renoir," Ken Armstrong, July 31, 2012

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