A former Microsoft executive's high-profile split from his spouse serves as an interesting lesson in division of assets. In a divorce involving parties with significant assets, many factors are considered in reaching an equitable distribution of property.
The couple's marital property included a very significant collection of fine artwork with an appraised value of around $102 million, including paintings by Claude Monet, John Singer Sargent and Jasper Francis Cropsey.
The couple managed to divide most of their extensive property themselves without assistance from a court. Twice, though, they tried to divide the artwork, and they were unable to come to a resolution.
Fine art can be tricky to work with in a divorce. Art, as an asset, is not particularly liquid. In this case, the couple quickly eliminated the possibility of selling the work and dividing the spoils. Any increase in value of any of the work between the couple's purchase of it and its sale would be taxed at 28 percent. They would have to pay significant fees to auction houses and dealers. These costs meant that the collection would not be nearly as valuable after sale as it was before.
Another potential problem with selling the work was that there was so much of it that, if sold, the value of other similar work would decrease.
The work also had different significance for each party in the divorce. In response to a court request to describe how the artwork should be allocated, the ex-wife indicated a strong emotional attachment to much of it. The man emphasized the function of the work; in allowing him to secure a line of credit and decorate his house.
One painting would have been very difficult to remove from a house in the United Kingdom because it was viewed as culturally significant there and faced the prospect of a required export license.
Even after a judge successfully allocated the work, the couple traded a few pieces with each other.
Fairly allocating property in a dissolution of marriage is not solely about making sure that each party gets half the marital assets. Rather, it involves a complicated evaluation of each person's interests in the property. A careful assessment of marital property can go a long way toward preserving the peace.
Source: The Seattle Times, "The art of divorce: She gets the Monet, he gets the Renoir," Ken Armstrong, July 31, 2012