21st Century King Lear

Herbert Neumann is the trustee of trust which owns 60 works of art worth an estimated $50 million. The most valuable piece is “Untitled (Tyranny)” by Jean-Michel Basquiat. The trust was created by Neumann’s brother for the benefit of Neumann’s 3 daughters. Now, one of the daughters, Belinda Neumann-Donnelly, is suing her father in his capacity as trustee to sell all of the artworks. She claims that the art will be impossible to divide equitably and that she needs funds for her family’s “significant housing, litigation, and education expenses.”

The same daughter has another lawsuit, presumably the source of the significant litigation expenses, against her father involving the sale of another Basquiat painting, “Flesh and Spirit,” formerly owned by her mother who died in 2016 that sold for $30.7 million last year. She claims that her father’s threat to contest the sale of the painting depressed the sales price. Oddly, she lives in the same two family building in NY as her father.

Several points:

1. The lawsuit to sell the paintings owned by the trust is likely premature because the trust likely provides that it will distribute its assets upon the death of Neumann.

2. Neumann’s wife, who owned the painting sold for $30.7 million, disinherited him from her will alleging he abused her. I am surprised that he did not elect against the will which would entitle him to 1/3 of his wife’s estate including part of the painting sales proceeds.

3. If Neumann’s wife gave the painting to the daughter before she died, as some articles insinuate, the wife would have been required to file a gift tax return and pay gift tax on nearly $25 million and the daughter would have to pay capital gain tax on almost the entire sales amount (Mrs. Neumann only paid $15K for the painting).

4. The emperor truly has no clothes because Basquiat paintings look like the drawings of a bored high school student on the back of his spiral notebook.

Photo Credit - Owen Hoffmann, ©Patrick McMullan
License:  Fair Use/Education (from linked article)

A Debtor, Not a Son

Slow times in the newsworthy estates area.  Going back a few months, Andrew Getty was the 47 year old grandson of J. Paul Getty who died of a meth overdose last year.  His father, Gordon Getty, filed a claim against his son's estate for repayment of $14 million that he allegedly loaned him.  Gordon Getty is also seeking the return of 55 pieces of art valued at $1 million.  The younger Getty's Hollywood Hills house was listed for sale this week at $8 million.

Several quick points:

1. Creditors of a decedent have to file a claim against the estate if they want to secure payment for a debt.  In Ohio, the claim must be filed within six months of the date of death.
2. Based on the amount of the claim filed by Gordon Getty, it is obvious that he financed his son's life.
3. Andrew is the second Getty grandchild to die a drug related death.  An incentive trust might have helped them manage their finances.
4. It should be no surprise that Gordon Getty is seeking money from his son's estate.  His father charged a son interest on the ransom he paid for the release of a kidnapped grandson.  Apples do not fall far from the tree.