Estates & Attorneys: OTE at Heckerling 2015

OTE’s first year at the Heckerling Institute on Estate Planning was full of talk of Art Leasing and Fractional Discounting. That we offered these services seemed to surprise attendees who tended to be more familiar with business valuation.

It was probably the first time that any of the attorneys or financial planners discovered that an art appraisal firm was capable of complex valuations outside of the usual insurance, resale or donation practice.

One conference highlight for OTE representatives was the chance to speak with some of the attorneys involved in the recent Elkins case. When the Fifth Circuit awarded the Elkins family a $14.4 million estate tax refund and allowed for the use of fractional interest discounts for artworks, it was a great thing for collectors and OTE.  This was exciting for us as, more than twenty years ago, OTE was the first firm to successfully win a substantial discount for our client in an estate that contained works of art.

This was also the first time the OTE unveiled our new brand image and we were proud to have a clean new aesthetic to bring with us to Heckerling.

We were extremely happy with the positive response we received from the people we met at the conference and we are excited about participating again in 2016. See you there!

Appraisal or Estimate? Why Free Is Not Always Better

I spoke with someone recently who told me how they got all their appraisals for “free” at auction houses. What they got were not really appraisals but estimates of value.

An estimate by an auction house will likely only reflect what the auction house believes the seller will receive at auction. These sorts of “appraisals” are not good for insurance purposes and are not viable in court. Most art insurance policies rely on the retail replacement value, meaning the compensation would be for the retail value  of an artwork, as opposed to the price at auction (which is usually lower than a retail value).

This article is by no means knocking auction houses, which have amazing experts and specialists, but it is important to understand that an auction house’s primary job is to sell art, and offering a free estimate is one way to draw in business.

If you go to an auction house and are not serious about selling with them but merely attaining a value this is probably not the best option for you. Although auction houses have a considerable amount of information at their disposal, they rarely have time to conduct extensive research into an artwork that is not being consigned to them. A free estimate is not necessarily giving your artwork the time and attention it deserves.

The case of Ravenna v. Christie's in 2001 is a good example of relying too heavily on a free estimate. Guido Ravenna sued Christie’s as a result of his wife’s meeting with an Old Master Specialist at Christie’s in New York after she was given mistaken information about the provenance of the painting. The Old Master’s specialist, after only seeing photographs of the work during their short meeting, valued it at between $10,000 to $15,000, as he thought it appeared to be the work of minor 17th Century Italian painter, Nuvolone. Ravenna, then sold the work for $40,000 to a dealer who only months later consigned the work to Christie’s. 

The Lamentation, by Ludovico Carracci

This is where it gets a little sticky. After the painting was examined again, it was determined to be a work not by Nuvolone but rather by Italian Baroque painter Ludovico Carracci, who is far more significant. The Lamentation, as it was renamed, was sold at auction in 2000 for $5,227,500 to the Metropolitan Museum of Art where it now resides. Ouch.

Heritage Auctions does a good job of explaining how auction house appraisals/estimates work:

“Usually, the request for an "appraisal" actually refers just to an evaluation for the potential value of an item through auction or private sale… Heritage regularly provides quick and free evaluations of the current market value of art or collectibles. This is in the form of a verbal or written auction estimate — the range of value that one would expect to see the item sell for in today's auction market. This valuation is not intended for use as a formal appraisal or for any purposes of establishing a value for insurance, tax, estate planning, collateral or third party transactions.” (Heritage Auctions - Defining Appraisals)

If you want to divest an artwork quickly, auction houses are the way to go. But if you are serious about finding out about the value of something you own, make sure you get an authentic written appraisal from a USPAP certified appraiser.

Copyright and Authentication

For the past couple of months there have been premonitory signals rumbling throughout that non-crystalline solid we loosely call the Art World that has ignited fear alike in scholars, dealers, consultants, collectors, artists and appraisers, a somewhat disparate cluster.

That Janus-headed fear on one side is Authentication and on the other Copyright, and is scaring the ego out of any number of those in the trade, and I use that word to encompass anyone who, either through fame or fortune, occupies the greater part of his/her time laboring in the field of art.

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The above is an excerpt from an article by Elin Lake-Ewald, Ph.D, ASA, RICS, April 2012.

To read the complete article please click here:

Viewpoint April 2012: Copyright and Authentication