It’s easy to see the sunny side of the future when you’re in love and planning a lifetime together.
But, if we're honest, it’s the twenty-first century and global divorce rates continue to rise, with the US averaging close to 50%.
Collections of art, antiques, and collectibles in some instances can be a significant portion of a marital estate. The value of those items is subject to equitable division during divorce.
We've spoken to divorce attorneys and accountants that handle the division of their clients' prized art collections and gathered a few tips to share. That all being said, if you’re thinking about taking your relationship to that next legal level, definitely speak with your accountant and your lawyer because some processes can vary state by state, and country by country.
Here are some things to keep in mind if and when you find yourself dealing with estate planning and divorce.
Divorce and an art collection
Go over your inventory and make a note of what pieces were acquired before the marriage and during it. Pieces that sold during a separation should be noted, as the income from the sale may be a financial factor. Agree with your spouse on an appraisal value—either from a recent report or a new one.
Throughout your lifetime, keep excellent records of what’s in your collection. Use an online art inventory software like Artwork Archive to keep the location, bills of sale, certificates of authenticity, appraisal reports, and photographs in the Cloud and easily accessible. It's key to keep this inventory up-to-date for estate planning purposes. A well-organized inventory is a useful tool and record during any major life event like marriage, divorce, theft, natural disasters, and death.
Prepare with a prenup
If you’re entering into a union with artwork you’ve collected or inherited, a prenuptial agreement could protect the art from being included in the marital asset list but not always. If you expect to continue adding to the collection throughout the marriage, you might consider negotiating the fate of these future acquisitions in your prenup.
Sharing your life with another person means a lot of things get intertwined. Even if you had the foresight to protect an emerging collection in a prenuptial agreement, if joint assets or funds were used in the care, restoration, or conversation of a piece, then your partner could claim it as a marital asset.
Did you and your spouse start a collection together within the marriage? Maybe it was something you added to together one piece at a time or a passion you found on your own. In these cases, each piece acquired during the marriage is considered a marital asset and more ‘ours’ than ‘mine’.
Marital assets are all property acquired during the marriage, regardless of ownership or who holds the title to it and can include houses, cash, stocks, bonds, cars, pensions, and insurance, among other items.
The ugly truths
Divorce is very rarely a pretty thing, and the truth about divorce and the fate of your art collection is also pretty ugly.
One ugly truth about your art collection is that in a divorce, art is no different than a car or a refrigerator. In a divorce, your most valuable or sentimental assets are just that—assets.
The other truth in divorce is that no assets are guaranteed safe regardless of where it came from, who loved it or who used it. It doesn’t matter who bought the piece or cared for an item, in a legal sense, divorce brings property down to a dollar amount.
Be prepared to have to think about your art collection as a bargaining chip when dividing up all the assets. It may not be as simple as an even split, and you might have to think about a quid pro quo in the division.