Upon the death of an internationally known and respected American artist the appraisal of his or her estate may be – should be – based first on legal precedent found in U.S. tax court cases, such as the estates of David Smith and Georgia O’Keeffe, as well as on a well-documented and competently analyzed approach to the particular inventory.
But not all artists are as famous, nor can the determination of value of the estates of lesser-known artists be resolved in the exact same manner. Addressing valuation and blockage discount must be carefully thought out and application adapted to the individual artist. A single approach to every artist’s estate is awkward and illusionistic. It is also the trademark of the lazy appraiser.
Our firm has appraised, among other well-known artists, the estate of Louise Nevelson, and the collection of artworks by Raphael Soyer, and currently is valuing 100,000 artworks from the estate of Andy Warhol (held by the Warhol Foundation and formerly handled by Christie’s), and the estate of Roy Lichtenstein. Records for these artists abound, although, as with all appraisals, both market analysis and economic interpretations of each individual work must be provided to illuminate individual valuations.
However, within the past six months we have been asked as well to appraise the estates of half a dozen artists of varying levels of market acceptance, both a challenging and a labor-intensive endeavor. There have occurred questions as to how aged can sales records be to maintain validity, and how important are consistent museum exhibitions for an artist who has had relatively few sales?
CASE STUDY: ARTIST #1
Although a talented artist who had studied with the best-known Abstract Expressionists, this artist’s career – apparently for family reasons – was contained within a 20-year timespan. During this period she had half a dozen one-person exhibitions at an established Madison Avenue gallery. During and following that 20-year span, she had had approximately 15 one-woman exhibitions at university galleries and at small museums. While exhibiting at commercial galleries, reviews in major newspapers had been uniformly favorable. No records existed as to the gallery sales, nor could her heirs recall the prices of more than 30 years ago.
Because the heirs could not make a decision as to which of the many paintings, drawings and sketches constituted salable artworks and should be retained, the decision was left to the appraiser who had to sort through hundreds of items, determining which could be considered as or having actual value, and which were more legitimately archival material. The latter category was the one into which the vast majority of the items belonged. Even a world-famous artist can leave behind scraps of paper with pencil strokes that have minimal or no commercial value. If an obscure artist’s best paintings have relatively little value, how much value can her minor drawings have?
Blockage discount was not applied in this case because of our preliminary efforts in sorting out the potentially salable paintings and drawings from the collection of half-completed compositions that made up the bulk of the estate. Since there were not records of her past sales, the current auction records of comparable artists were utilized and applied towards the short list of paintings that we determined to be complete and in good condition. The few completed drawings were priced in relationship to the paintings. It is possible that there will be a revival of interest in the school of painting in which the artist specialized. In that event, the prices placed upon her estate art would represent the fair market value for purchase should the heirs wish to sell inventory in the future.
CASE STUDY: ARTIST #2
He was not in the mainstream art world but was a renowned medical illustrator who frequently sold his related paintings to interested collectors; therefore, there was a history of sales of both paintings and drawings. He was also paid for the use of his illustrations in scientific journals published outside the United States. For this aspect of his work, it was necessary to work with his accountant in determining the past and projected earnings from these copyrighted works.
Determination of his most distinguished and desirable works was relatively easy since the artist himself had framed the works he knew to be the most valuable. The prices realized within recent years for his paintings averaged $6,000, for watercolors $4,000, and for drawings $2,500. Although not vast in scope, the works that remained in the estate were in excellent condition, and each one was deemed salable. But salable to whom? Was the market with the medical community, among collectors, or possibly of interest to the general public?
To us the colorful structure of DNA looked amazingly like the 1990s Brice Marden painting, and we believed the appeal of the deceased artist’s paintings went well beyond the potential of the medical community. At least three prestigious university science departments began inquiries as to the disposition of the artworks. Because the heirs were financially unable to donate more than a portion of the paintings and works on paper, we recommended that they propose a combination of charitable contribution and purchase.
Since the total inventory approximated 1,000 items, we devised blockage discounts in five separate categories. The least discounted, of course, would be the group most desired by the potential purchasers.
CASE STUDY: ARTIST #3
This was an artist quite famous in her day, in part because her art was of the moment and she was represented by a very popular gallery, and in part because she was married to one of the country’s most famous businessmen/collectors. She was included in several well-publicized group shows, as well as having had a number of one-person exhibitions at a Madison Avenue gallery and in small museums.
As with the first artist, there was no pressing need to make money, so her pure artistic endeavors tapered off and she devoted the remainder of her life to print-making, book illustration and occasional family portraits – all in a desultory fashion.
We found several older gallery owners who not only remembered the artist quite well, but spoke of her sell-out shows of 30 years before, and provided a general idea of prices for that period. Of course, that had little relevance to today’s market except to reinforce the probability the artist’s works could probably be promoted and sell reasonably well in the future.
It did not help in finding comparables for her work on the secondary market, however. The challenge was to find works at auction by artists whose careers paralleled that of this woman, i.e., artists who had achieved recognition during a bygone era and who had received critical recognition then – even though there was currently little enthusiasm for their work.
We then divided the paintings into categories that reflected works for which the artist was best known – in this case, portraits, and the other, less sought after images, such as still lifes and landscapes. We subcategorized these to reflect the periods in which her works were most successfully executed. Blockage was applied according to numbers of works within the categories and level of salability.
Although the artist had produced a great quantity of prints, they had not been exploited during her lifetime and were executed primarily as book illustrations. The very highest blockage applied to the print since there was not current market for the paintings, and her print market was totally untested, in her lifetime as well as in current circumstances.
CASE STUDY: ARTIST #4
This artist led a wildly bohemian life in the days when there really were bohemian artists populating Greenwich Village. She had been a refugee from the war in Europe in the 1930s and among her friends and colleagues were the European intelligentsia who had fled to the States to avoid possible internment. This artist’s most memorable paintings were recollections of that devastating war, and these were the paintings purchased by several American museums during the period in which they had been executed. The great bulk of her artwork languished in a warehouse and apartment. Most of them were expressionistic abstractions, no longer in fashion and of middle-range quality.
But there had been a continual stream of admirers for this artist. Whether they followed her bizarre and fascinating personality or whether they genuinely admired her paintings is a secret that died when the coterie was disbanded. We do know that she continued to sell her art until her final days, although at a pace of perhaps two or three a year – enough to supplement a handsome income from stocks.
The single category of sellable paintings had to be separated out from the remainder of the artist’s estate because it was definitely in a separate category – similar to the career of a writer who produces one memorable novel in his lifetime that sells in the millions and is remembered in anthologies, but whose every other novel fails miserably and is instantly remaindered and forgotten forever.
Since the prices of the recently sold paintings were available, and because the artist had sold directly from her studio and not through a gallery, these prices were considered fair market. There were relatively few works left from the one desirable category and for these no blockage was applied. However, there was high blockage placed on the remainder of the estate since there was little proof that there was any market whatsoever for these works, and because many of them were in poor condition. The only other group of works that did not fall into the high blockage category was one in which the artists had portrayed famous friends in the world of art, dance and theatre. It was our impression that it would not take very long to dispose of these portrait depictions.
CASE STUDY: ARTIST #5
Not considered an art world celebrity, but certainly established and respected as a professional during his lifetime, this artist died in mid-career while being represented by one of the more important contemporary art galleries in New York, as well as by two major galleries in Europe.
He had been a painter, print-maker, and sculptor, selling very modestly but steadily in each of these categories. A few years before his unexpected death, the artist gave up his involvement in these other pursuits and turned to what was at that time an adventurous arena of art and design – artists’ furniture. He was emerging as an innovative force in this field when he died. It was from among his most successful artist-contemporaries that his collectors came, indicating that his future would have been permanently assured had he lived long enough to produce a large body of work.
Here is an example of the insiders’ artist, one whose work sold to other artists – major ones – but whose response from the public was relatively tepid. This artist’s works are in the collections of at least a few of the most respected and famous painters in the country. These were purchases, not gifts, and the families of these artists continue to purchase the furniture from the estate. It is evident, therefore, that the entire collection of remaining artists’ furniture should be treated as apart from his conventional sculpture and prints that have sales records of high prices but little activity.
There are several ways in which this matter can be approached, but it has been our policy to break down as much as possible the various areas of the artist’s œuvre, and then create further divisions within these areas. In reviewing images of his prints, for instance, we were able to pinpoint which images sold well, which ones less well, and which ones not at all. Different blockage was applied in each case although the prices for the prints in all categories were close in value.
None of the artist’s artworks of any kind had been offered or sold at auction, so the valuation was based on actual past prices and the separate segments were analyzed to determine how long it would probably take to sell the remaining estate. Few sculptures remained, and all were of large dimension. During his lifetime the artist had sold on an average of one large piece every other year so blockage was easily arrived at. Since the artist was least known for his paintings, and relatively few had ever sold (and these only at the beginning of his career), this category received the highest blockage discount. Indeed, some of the loosely rendered paintings could have been considered of archival value only since it is unlikely they could ever have been sold. These canvases appeared tentative and unfinished.
As long as the appraiser has done his homework, it is our belief that common sense and hard work will take the valuer far in determining how to approach the estate of an artist. There is no routine approach to this area of appraising, and every appraiser must be able to justify his conclusions with a logical and diligent approach to value.
The intelligent appraiser will also be aware of the pitfalls in taking on this type of estate.
It is not always the wish of the heirs to an artist’s estate to find the very lowest values. There may be plans, not necessarily shared with the appraiser, to market the artworks immediately, to advertise and promote the estate’s holdings. There may even be galleries in the wings, hoping to take on the estate. In this case the price at which artwork is sold involves capital gains tax, using the estate value as the tax basis. Whatever the reasoning of the client, the appraiser should always approach evaluation in the same even-handed way, no matter what the motivation of the client. The integrity of the report should never be compromised, for the more the appraiser knows about the way his client is thinking the more pitfalls he can avoid.
It is a good idea to explain to the client at the outset of an artist’s estate appraisal, as well as for all other reports, the methodology that will be used and the requirements of the appraiser. This approach may well avoid recriminations that can occur mid-way through – or at the conclusion – if the client is expecting one result and the appraiser supplies a different one.