The Art Detective is a weekly column by Katya Kazakina for Midnight Publishing Group News Pro that lifts the curtain on what’s really going on in the art market.
A long year of pandemic lockdown has put considerable stress on relationships—and divorce lawyers say they are busier than ever. The wave of uncouplings has big implications for the art market, where divorce, death, and debt are considered the three Ds that keep a steady stream of inventory flowing in.
While the news of Bill and Melinda Gates’s split brought the question about how the mega-wealthy divide assets into the public eye, breakup-related business has been quietly gaining momentum in the art world for months.
“Some have said that the floodgates have opened up,” Elizabeth Green Lindsey, president of the Members of the American Academy of Matrimonial Lawyers, said of the pace of divorce filings.
Going through his own divorce in the middle of the pandemic, Sotheby’s executive David Schrader had to figure out the best way to handle the blue-chip contemporary art collection he assembled over more than two decades, which spans from Donald Judd and Sol LeWitt to Christopher Wool and Mark Grotjahn.
As he weighed the options—selling everything, buying out his spouse of 15 years, or taking art objects in lieu of cash—he found that a number of his clients were in the same boat.
“People are rethinking their lives in many different ways as a result of the pandemic,” said Schrader, 45, head of Sotheby’s private sales, which tallied $1.6 billion last year. “How they want to live them, where they want to live them, and with whom they want to live them.”
Melinda French Gates, who filed the divorce petition on May 3, said her 27-year marriage with the Microsoft co-founder was “irrevocably broken.” The couple outlined the details in a separation contract that hasn’t been made public. At stake is a $130 billion fortune, which includes Leonardo Da Vinci’s scientific writings and paintings by American masters such as Winslow Homer and Andrew Wyeth.
“I imagine that the majority of the divorce agreement has been worked out way before they made their public announcement,” said lawyer Jacqueline Newman, who specializes in high-net-worth matrimonial cases at Berkman Bottger Newman & Schein LLP. “I would bet that the artwork has already been divided up as well.”
Representatives for Bill and Melinda Gates didn’t return emails and calls seeking comment.
The Gateses join other prominent couples with art to divide. The largest trove is the $700 million collection that has to be sold by the end of 2022 as a result of the bitter divorce of octogenarians Linda and Harry Macklowe. There’s also Kanye West and Kim Kardashian, whose Los Angeles home was outfitted by art dealer Axel Vervoordt; and Related Companies chairman Stephen Ross, known for installing Fernando Botero and Jaume Plensa sculptures in his mega-developments and private residences.
De-couplings are already having an impact on appraisals, which have to be done early in the process, according to valuation experts and matrimonial lawyers. At Winston Art Group, divorce-related valuations of fine art and collectibles ranging from baseball cards to designer purses are up 25 percent compared to just before lockdown, according to managing director Elizabeth Von Habsburg.
This uptick is likely to result in a sales spike over the next 12 to 36 months, said Schrader.
“There’s a lag,” he said. “The reality is that these cases take a while to cycle through. Someone announces a divorce doesn’t mean the material is coming next season. You probably can’t get a court date for two to three years because of the back-up due to COVID.”
Having a prenuptial agreement can speed things up, but in its absence, spouses have to figure out—and agree upon—the value of all their assets before proceedings can get underway. Schrader began his divorce in November 2019. Though amicable, it was only recently finalized, he said. He ended up selling some works, buying out others, and taking additional works in kind, but declined to specify further.
If spouses don’t agree on values—or don’t have the money to buy each other out—their only option is to liquidate. “And if you go to trial, which I didn’t, the judge will say, ‘Liquidate and liquidate publicly,’” Schrader said.
That scenario is the story of the Macklowe collection. The battling spouses disagreed so dramatically on so many art valuations that the court ordered them to sell the most valuable works at auction, appointing an official to oversee the process.
In other prominent divorce-related art sales, Johnny Depp offloaded eight Basquiat works for £11 million during his divorce from actress Amber Heard. Sue Gross, the estranged wife of “bond King” Bill Gross, sold a 1932 Picasso portrait of Marie-Thérèse Walter for $36 million in 2018. The following year, writer and filmmaker Anna Condo parted with paintings by her ex-husband, artist George Condo.
The value of these assets is both financial and emotional.
“There are people who love their collection more than they love their children or their spouses, for sure,” said William Zabel, a prominent trusts and estates attorney who is representing Ross in his divorce. (Zabel declined to comment but called it “amicable.”)
Bidding wars between spouses are ubiquitous, according to lawyers. Sometimes, it’s more about inflicting pain on an ex than the love of the object. Newman recalls one client whose wealthier husband threatened to outbid her on a painting she loved—and then film himself burning it. “He would just torture her with it,” she said.
Tax consequences also factor into whether a couple ends up selling art; the potential for large capital gain taxes may deter people from selling.
“If you are simply splitting them up between yourselves, no taxes there,” said Tom Kretchmar, a partner at the law firm Chemtob Moss Forman & Beyda, LLP.
Determining how to appraise and transfer new collectibles with fast-rising values and digital presences is bound to complicate asset division. Over the past year, sneakers, baseball cards, and NFTs have sold for millions of dollars.
A divorcing spouse with an NFT collection is the worst fear of Anita Heriot, president of Pall Mall Art Advisors. “God help us,” she said, “if NFTs will have to be valued.”
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