They say you should marry someone who you share common interests with. Those interests may be religion, sports, theater or just sex. Unfortunately, you cannot take any of these interests home and put them on the wall to show your friends.
Art is one interest that you can enjoy, you can buy…and you can even make some money on it.
The art enjoyer is rarely so mercantile, however. The biographer of Michelangelo and Vincent Van Gogh, Irving Stone, said “the maximum value of art is that it allows the artist to express himself.” That is all well and good for the artist…but what about if the art is getting divided in a divorce?
How is art divided in an Illinois divorce?
Marital And Non-marital Artwork In An Illinois Divorce
Only marital property is divisible by an Illinois divorce court because the court must award non-marital property to spouse who owns it.
“[T]he court shall assign each spouse’s non-marital property to that spouse.” 750 ILCS 5/503(d)
So, before any artwork is valued or divided, that artwork must be deemed marital by the court.
“Before a court may distribute property upon the dissolution of a marriage, it must first classify the property as either marital or nonmarital.” In re Marriage of Faber, 2016 IL App (2d) 131083
If the artwork was purchased, made or acquired during the marriage, it is probably marital property.
“‘[M]arital property’ means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage” 750 ILCS 5/503(a)
“For purposes of distribution of property, all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed marital property.” 750 ILCS 5/503(b)
Some artwork which was purchased or acquired during the marriage may be deemed non-marital.
Artworks that have been purchased or acquired prior to the marriage and that artwork’s subsequent increase in value shall be deemed non-marital.
“[P]roperty acquired before the marriage [and] the increase in value of non-marital property [shall be deemed non-marital]” 750 ILCS 5/503(a)(6),(7)
Likewise, all artworks which were acquired during the marriage by exchange with non-marital money or other non-marital property shall be deemed non-marital in character.
“[P]roperty acquired in exchange for property acquired before the marriage [shall be deemed non-marital] 750 ILCS 5/503(a)(2)
Any artwork which was received as a gift will also be deemed non-marital.
“[P]roperty acquired by gift, legacy or descent or property acquired in exchange for such property [shall be deemed non-marital]” 750 ILCS 5/503(a)(1)
If an artwork is deemed marital, it must be valued and allocated to the appropriate party.
If there is a lot of art that is treated as a collection despite the fact that some pieces are marital and other pieces are non-marital, the collection, as a whole will not be deemed marital.
“[C]learly identifiable and traceable art objects which do not lose their individual identity upon remaining in the [collection] after the marriage. We hold the disputed personal property here was originally nonmarital property and retained that status even after the marriage.” In re Marriage of Crouch, 410 NE 2d 580 – Ill: Appellate Court, 3rd Dist. 1980
Who Gets The Art In An Illinois Divorce?
An artwork cannot be divided in two. One spouse cannot get the statue of David’s torso while the other spouse gets David’s legs. Each piece of art will be awarded to a particular spouse or sold by agreement.
An art owner and their can have an emotional, sentimental and sometimes transcendent relationship.
An Illinois court is more likely to look at who put the effort into acquiring the art when awarding the artwork.
Illinois divorce courts “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including…each party’s contribution to the acquisition, preservation, or increase or decrease in value of the marital or non-marital property” 750 ILCS 5/503(d)(1)
The value of the marital artwork awarded to one party must have some offset value awarded to the other spouse.
Illinois divorce courts “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors, including…the value of the property assigned to each spouse.” 750 ILCS 5/503(d)(3)
Therefore, every awarded piece of artwork must be valued to determine what equitable amount the other spouse should receive to offset the marital portion they were not awarded.
Valuing Artwork In An Illinois Divorce
While art holds different value to each person who beholds it, an Illinois divorce court is only interested in the artwork’s market value.
“In determining the value of assets or property…the court shall employ a fair market value standard.” 750 ILCS 5/503(k)
Determining the fair market value of an artwork will likely require an expert in art valuation.
The owner of an artwork, without expertise, cannot testify to the fair market value of an artwork. Opinions are not allowed as evidence unless the witness is certified as an expert.
“[T]he general rule is that testimony of a witness’ opinion is not admissible into evidence” People v. Brown, 558 NE 2d 309 – Ill: Appellate Court, 1st Dist. 1990
An expert in art valuation can testify to the value of an artwork.
“A witness may…testify as an expert if he or she has knowledge and experience beyond the average citizen that would assist the [finder of fact] in evaluating the evidence.” People v. Loggins, 130 NE 3d 432 – Ill: Appellate Court, 1st Dist., 3rd Div. 2019 (Citations Omitted)
If the expert witness has ever done an art valuation before…they are probably expert enough to testify as to the value of the art which is subject to the divorce.
“There is no particular way in which that expertise had to be acquired; it could have come through formal study, training, or research, or through practical experience, in the relevant specialized field.” People v. Loggins, 130 NE 3d 432 – Ill: Appellate Court, 1st Dist., 3rd Div. 2019 (Citations Omitted)
Invariably, the person keeping the art will have an expert testify that the art has little value while the person being awarded other marital assets in lieu of the artwork will hire an expert who testifies that the art is very valuable.
The dueling experts art valuations will be adopted based on their credibility.
“Credibility determinations are within the sole purview of the trier of fact.” In re Marriage of Georgiades, 2021 IL App (2d) 200677
“It is well established that credibility determinations should be left to the trial court, as it is in the best position to observe the personalities and temperaments of the parties and assess their relative credibility when there is conflicting testimony on issues of fact.” In re Marriage of Stoker, 2021 IL App (5th) 200301
The court will pick a value between one expert’s low value and the other expert’s high value.
“Generally, as long as the trial court’s valuation of marital assets is within the range testified to by expert witnesses, it will not ordinarily be disturbed on appeal.” In re Marriage of Heroy, 385 Ill. App. 3d 640, 663 (2008)
The value must reflect what the artwork is worth at the time of the valuation.
“[I]n determining the value of the marital and non-marital property for purposes of dividing the property, has the discretion to use the date of the trial or such other date as agreed upon by the parties, or ordered by the court within its discretion, for purposes of determining the value of assets or property.” 750 ILCS 5/503(f)
An artwork’s capacity to appreciate in value will NOT be considered by an Illinois divorce judge.
“If one spouse is awarded a piece of artwork and the other is awarded a boat of equal value, it is immaterial that the piece of art may appreciate in value and the boat will depreciate. It is the value of the asset at the time of distribution that the circuit court must consider when dividing marital property.” In re Marriage of Abrell, 923 NE 2d 791 – Ill: Supreme Court 2010
It is crucial that the artwork’s value be presented to an Illinois divorce judge for consideration. Otherwise, the court will have to revisit the entire divorce in the future if the artwork gets brought back up.
“A party must present sufficient evidence of the value of the property, and where a party has had a sufficient opportunity to introduce evidence but offers none, that party should not benefit on review from its omission.” In re Marriage of Abu-Hashim, 2014 IL App (1st) 122997
“In the absence of evidence of valuation, we do not believe that the division of the parties’ marital property could have been fully determined by the trial court [and, therefore, the issue must be remanded to the trial court].” In re Marriage of Cuisance, 115 Ill. App. 3d 551, 556 (1983)
Tax Consequences Of Selling Art During An Illinois Divorce
If either party to an Illinois divorce keeps an artwork, there is no tax consequence to either party.
“No gain or loss shall be recognized on a transfer of property from an individual to (or in trust for the benefit of)
…
a former spouse, but only if the transfer is incident to the divorce.” 26 U.S.C. Sec. 1041(a)(2)
If the artwork is agreed to be sold or ordered sold the court must consider “the tax consequences of the property division upon the respective economic circumstances of the parties.” 750 ILCS 5/503(d)
The capital gains tax for art sales at 28% is higher than most other investments.
“28-percent rate gain” means the excess (if any) of…the sum of…collectibles gain” 26 U.S.C. Sec. 1(h)(4)
“[T]he term “collectible” means…any work of art” 26 U.S.C. Sec. 408(m)
These capital gains taxes are after an art broker’s commission which can be as high as 25%.
So, a party who is awarded art should remind the judge that the value if sold is considerably lower if taxes and sales commissions are considered.
A judge may retort, “Well, you haven’t sold the artwork, now have you?”
NOTE: All of the above legal commentary applies to any collectible item such as baseball cards, comic books, sports memorabilia, wine collections or anything that has collector’s value within a small community.
If you own artwork (or any other valuable item that doesn’t have a price certain) and you are getting a divorce in Illinois, contact my Chicago Illinois family law firm to speak with an experienced Illinois divorce attorney.
