News

Amy Scollan and Anastassia Dimmek examine what happens to an art collection when couples divorce in Antiques Trade Gazette

  • June 13, 2022
  • By Amy Scollan, Partner and Anastassia Dimmek, Associate

This article was originally published in Antiques Trade Gazette and can be found here

What happens to art collections on divorce under English law?

The sale of Linda and Harry Macklowe’s renowned art collection for over $900m following their divorce hit headlines earlier this month. In their case, the judge in the State of New York ordered the sale of their art – but what happens to art collections on divorce under English law?

When spouses separate, the first step is to identify and value their assets, and to quantify their needs, e.g. for a home and an income stream (as assessed by the court in light of the assets available and the lifestyle during the marriage). If the parties’ assets are less than their needs, then the assets will be distributed so as to meet the parties’ needs to the extent possible, prioritising any children. The source of the assets will be of limited relevance.

Where assets exceed needs – as is likely to be the case for those with extensive art collections – the next stage is to characterise each asset as “matrimonial” or “non-matrimonial”. Matrimonial assets are those built up by the parties during their marriage, whereas non-matrimonial assets derive from a source external to the marriage, e.g. pre-owned or inherited assets. For example, a portrait of a family ancestor inherited during the marriage will be a non-matrimonial asset, whereas a sculpture purchased using income earned during the marriage will be matrimonial.

Following the categorisation of assets, the basic assumption is that matrimonial assets are shared equally, and non-matrimonial assets are retained by the owner. However, non-matrimonial assets can be transferred to the financially weaker party, if this is necessary to ensure both parties will be able to meet their financial needs, or to comply with a nuptial agreement. So if, for example, the portrait of an ancestor is worth £2m, and without it being sold there would be insufficient funds for both parties to purchase a suitable home, the court may order its sale and the distribution of the proceeds between the parties despite the fact it is a non-matrimonial asset.

Where an art collection is a matrimonial asset and is to be shared, difficulties may arise over implementation. The collection could be shared such that each party receives items with a broadly equal total value. However, if there is a dispute as to who should keep a particular item, this will need to be resolved by the judge, who may look at matters such as who chose it, or has the closest emotional connection to it. In practice, sharing items in specie in this way can be difficult if there are valuation disputes. The valuation given by experts in the Macklowe case differed by hundreds of millions of dollars.  In circumstances where there are significant discrepancies in expert valuations the only way to determine and share a collection’s value is for it to be sold and the proceeds distributed. This can lead to rather unfortunate outcomes for passionate art collectors/ artists to whom, very often, the integrity of a collection is paramount, or who are particularly attached to certain art works.

The distinction between non-matrimonial and matrimonial assets, in practice, can be less clear-cut than the parties assume; what happens to a collection a spouse began before marriage but which amassed most of its bulk (and value) over the following decades? Can an artist’s own works be ringfenced and should royalties, including profits from any re-sale rights, be included? Cases often turn on their own facts and require careful analysis.

Further challenges are added where a spouse holds intellectual property rights in art works or, in the case of crypto assets/NFTs, rights in an underlying, physical art work, which has considerable monetary value.

Carefully drafted pre-nuptial agreements can demonstrate the parties’ intention in anticipation of marriage and details about one’s collection, and help to avoid these kind of disputes in the event of divorce.


Related News

Sep 21, 2022
Olivia Piercy featured in a Q&A in Today’s Family Lawyer on her career path and the areas of family law undergoing transformation
Sep 06, 2022
Constance Tait discusses maintenance and inflation in 2022
Sep 06, 2022
Hunters Law shortlisted at the Family Law Awards 2022
Sep 05, 2022
Olivia Piercy joins Hunters Law as a Partner in the Family Department
Jun 29, 2022
Hunters’ Family Department highlighted in the 2022 edition of the Spear’s Family Law Index
Jun 15, 2022
Philippa Kum and Eri Horrocks outline top tips for co-parents on agreeing arrangements for children in EPrivateClient
Jun 08, 2022
Amy Scollan and Anastassia Dimmek discuss the distribution of artwork during divorce proceedings in EPrivateClient
May 12, 2022
Eri Horrocks examines post-separation assets in Today’s Family Lawyer
May 09, 2022
Gregor Kleinknecht discusses the Nicosia Convention and how it could tackle cultural goods trafficking in Antiques Trade Gazette
May 05, 2022
Gregor Kleinknecht examines the new international convention to create criminal law sanctions to protect cultural property in The Times

© Hunters Law LLP 2022 | Privacy NoticeLegal & Regulatory | Cookies Policy | Complaints Procedure.

Hunters Law LLP is authorised and regulated by the Solicitors Regulation Authority (number 657218)