Artists’ Estate Management
During their early careers, planning for posterity is a low priority for most artists. But as careers develop, especially if market and/or critical successes are achieved, what should happen to works after death becomes an increasingly important issue. Many artists hold works back from public exhibition, sale or gift throughout their working lives in order to create the proverbial ‘pension fund’. Post mortem artistic estate management – and good planning for it during life – can be considered in the light of a very recent court case concerning the estate of Robert Rauschenberg; it was decided in August 2014 by the Probate Division of the Circuit Court for Lee County in Florida, where the artist had his last home and died in 2008. US and UK laws are very similar and often the same in relation to estates, wills, trusts and foundations. Probate courts in both jurisdictions adopt similar approaches to estate disputes, which makes this judgment instructive for UK artists and their heirs.
As he achieved financial and critical successes, Rauschenberg established and endowed many philanthropic entities including Change Inc. offering emergency grants to practising artists in need, ‘regardless of artistic skill’, and Rauschenberg Overseas Culture Interchange ‘to develop artwork in countries around the world, instigate cross-border communication, and promote peace-keeping’. In 1990 at the age of 65 he also established the Robert Rauschenberg Foundation to ‘foster the legacy of Rauschenberg’s life, work, and philosophy that art can change the world’ through supporting artists, initiatives, and institutions that ‘embody the same fearlessness, innovation, and multidisciplinary approach that Rauschenberg exemplified in both his art and philanthropic endeavors’.
This Foundation found itself in dispute with the Robert Rauschenberg Revocable Trust (RRRT), a separate legal entity established by Rauschenberg in 1994 to inherit (via his Will) his artistic estate and some real estate; to conserve and manage those assets in the years immediately following his death, and eventually hand them over in good shape to the Foundation, which would be chaired and led by his son Christopher Rauschenberg.
When Robert Rauschenberg died in 2008 the assets inherited by RRRT were valued at around US$605 million. When the assets were transferred by RRRT to the Foundation in 2012 they had grown to around US$2.1 billion. RRRT’s mission had been to gather together the artist’s considerable assets (mostly unsold artwork and some real estate), to maintain and manage them, and give them (and/or perhaps some proceeds of sale) to the Foundation.
This work of initial artistic estate management had been given to three of Rauschenberg’s close friends and colleagues, appointed as RRRT’s trustees: Bennet Grutman, his accountant for 18 years; Darryl Pottorf, an artist and his assistant who lived and worked with him for over 25 years and was executor of his Will; and Bill Goldston, his longstanding business partner in a fine art print workshop and publishing company. The legal dispute arose over the fees payable to these people for their work as RRRT trustees over the four post mortem years. Together the trustees claimed between US$51 to $55 million as a ‘reasonable’ sum in fees; the Foundation disagreed and argued that they were entitled to only US$375,000.
US and UK laws have similar provisions governing payment for the work of trustees (and of executors of Wills and of administrators or personal representatives of those who die Will-less). A trust’s foundation document can expressly forbid trustee remuneration, or allow it and specify the amount/s of payment, or (as is more usual and was done in RRRT’s case) allow remuneration by stating that trustees are entitled to ‘a reasonable fee for their services’. The heart of the Rauschenberg case was over what is ‘reasonable’ remuneration for the work of RRRT’s trustees.
Although every practice is different, the material arising through this court case offers really valuable and useful information for wider use. Unsurprisingly, the probate court first considered legal arguments from each party to the dispute as to what legal criteria the court was required to use when determining ‘reasonable’ remuneration for the trustees. The court decided that the law required it to consider many factors, principally the nature and extent and market value of the artistic estate; the work done by the trustees; and the monetary value of such work. The court then used these criteria to decide what would be ‘reasonable’ remuneration for RRRT’s trustees. The court’s reasoning is illuminating and instructive, and serves as a sound checklist of the many and complex factors that might be considered by artists planning their estate management.
Looking at the work of RRRT trustees, the court considered that key factors included the following:
- Immediately after Rauschenberg’s death, the RRRT trustees ‘planned, advertised, and managed several exhibitions and memorials’.
- At the same time they ‘developed a strategic plan to withdraw Rauschenberg’s art from the market, in order to prevent a decline in value from speculators or collectors flooding the market with his art’, which included immediately contacting all galleries holding art on consignment, and directing that the art be returned.
- Appropriate insurance cover was secured for all estate assets.
- All artwork in trustees’ possession was moved to a suitable warehouse for safekeeping, conserving, inventorying and appraising.
- After researching expert appraisers and their fees, Christie’s was appointed to conduct a formal market appraisal.
- All artwork was reviewed ‘to determine which pieces should remain in the Foundation’s permanent collection’.
- Trustees dealt with litigation over Rauschenberg’s intellectual property rights and managed authentication requests.
- When ‘the time was right to re-introduce the art on the market’, trustees managed ‘placement of art in museums and galleries for exhibitions’.
- A range of dealers was interviewed and Gagosian Gallery was appointed to represent the estate worldwide.
- During the four or so years after the artists’ death in 2008, RRRT trustees effectively ‘curated, set prices, negotiated with the galleries and museums, and were involved in all aspects of each exhibition, such as advertisements and catalogs’.
The court then examined tangible evidence of the work done by the RRRT trustees, to determine its financial value. The market value of the estate’s assets had more than tripled over the four years after the artist’s death, from around US$ 605 million to US$2.1 billion. The complexity of the estate, and the trustees’ legal duty to act it in the best interests of the eventual beneficiary (the Foundation) had presented substantial management challenges and risks for the trustees. The court also considered the ‘unusual skill or experience’ the trustees brought to their work, their fidelity and loyalty to Rauschenberg’s vision for posterity, time consumed in trust work and issues arising from the Foundation not being fully established and ‘prepared for turnover [of assets] for a few years’.
The court judged that RRRT trustees had done ‘an exemplary job’. Having already been paid US$8 million by RRRT for their work over four years, the court awarded them a further US$16.6 million, making their ‘reasonable fee’ a total of US$24.6 million. The very size of these payments and the detailed unpacking of the work involved is a valuable wake-up call. Whether substantial or small in market value, every artistic estate is uniquely valuable and deserves forethought and sound posterity planning.
© Henry Lydiate 2014