The Cost of Superstition: Picasso's Cautionary Tale

Written By

Sarah D. McDaniel, CFA

Head of Art Resources Team (ART)
and UHNW Content & Analytics

Ferdousi Islam

Executive Director of Art Resources
Team (ART)

On April 8th 1973, Pablo Picasso died at the age of 91. Consistent with the dynamic and tumultuous life he lived he ensured his heirs would now face an incredulous journey. Picasso died without creating a will as he was reticent to discuss his death lest he tempt fate. The lack of planning may well have also been the result of his failed relationship with his first wife Olga whom he refused to divorce when he learned that she would receive half of the art he had created. He left seven potential heirs including four children, a widow (not Olga) and two mistresses to determine the fate of approximately 45,000 works of art, two chateaux, three homes and approximately $6 million in cash, gold and securities. It took approximately six years, sixty meetings and $30 million in fees for lawyers, appraisers, cataloguers, government officials from several countries and the President of France to settle his estate among the acrimonious heirs. By 1980 it was estimated that his estate was worth approximately $250 million however, many experts believe this number was closer to $1 billion. Ironically, the one stipulation Picasso did make prior to his death was for Guernica to be returned to Spain which it did in 1981 but only after Franco died.1, 2

The Musee Picasso in Paris was established with the testamentary gift of some of Picasso’s estate including 203 paintings, 158 sculptures, 88 ceramics, 1500 drawings, 1600 prints and 33 sketchbooks whose collective value served as an in-kind payment of the estate tax. The settlement of the estate did not settle the heirs’ differences and it was not until 1996 that Claude, one of two children with his mistress Francois, was named the legal administrator of the estate by a French court at which time the Picasso Administration was created to oversee legal concerns including but not limited to authentication, licensing of the Picasso name and management of the heirs’ copyright that expires in 2043. Until this time, some but not all of Picasso’s works had been catalogued in 33 volumes of a raisonne encompassing work he had completed from 1895 through 1972. Hundreds and sometimes thousands of perceived works by Picasso are submitted for authentication annually and it is believed that Picasso’s works have been stolen more than any other artist’s works with more than 1000 pieces registered as stolen in the Art Loss Register.3, 4

One of many lessons to learn from the Picasso estate is that of governance of cultural heritage particularly at a time when many of the artists from "The Greatest Generation" have and continue to pass away and entrust future generations with the meaning as well as the physical possession of their lives’ work. Not making a decision by not creating a will is in fact making a decision in that the artist is delegating the disbursement of the estate to the relevant governmental authorities.

To put the lack of planning during the lifetime of one of the greatest artists of the 20th century into context, in the USA, the current tax code and assessable impactful income tax and estate strategies for artists are quite limited and punitive compared to what is accessible to art collectors. For example, during an artist’s life, when an artist sells a work of art, the cost basis is comprised of the cost of the brush, canvas and paint used to make the painting as an example and the gain is taxed as ordinary income. An art collector’s cost basis is the purchase price plus any transaction costs and is taxed at a special collectible capital gains tax that is higher than the regular capital gains tax but lower than the ordinary income tax rate. Additionally, during an artist’s life, if an artist wants to be philanthropic the potential donation value is based off the cost basis (therefore negligible) and must include the copyright with the work of art which is not an incentive to be charitable. For an art collector who wishes to be philanthropic, the potential deduction is based on the fair market value of the piece if it is given to a public charity and the art is related to its exempt purpose. Interestingly, during an artist’s or a collector’s life s/he uses the fair market value to gift to non-charitable beneficiaries and the cost basis of the art is assumed by the non-charitable beneficiary. However, as noted previously, the cost basis assumed from an artist is significantly different than the cost basis assumed from a collector.

However, the gap in potential estate planning benefits narrows when the artist and the art collector are deceased. At death, both the artist and the collector may deduct 100% of the fair market value of the work of art if given to a public charity that will utilize the piece in a related use. Additionally, the deceased artist may split the copyright of the art from the art and give the copyright to his/her heirs without losing the deduction. Both the deceased artist and art collector may deduct the cost of selling the art if there is a forced sale to satisfy debt, taxes and distributions or if there is a will that specifies art to be sold and the proceeds distributed.

The orderly transfer of cultural works from one generation to the next necessitates a governance plan that address cataloguing, authentication, provenance, licensing, copyright and archiving all with the purpose of creating transparency and legitimacy of an artist’s work for future generations to learn and be inspired.

Without a strategy, an artist’s life’s work may over time fail to be a cultural asset and rather become a liability subsumed with adverse behaviors. Increasingly, as artists age, the art market expands and art historical scholarship evolves, artist foundations are created as part of the settlement of artist estates in order to preserve cultural legacies. The strategy distinguishes which works are designated for the estate and heirs and which are to endow and enrich the artist foundation.

A beneficial by-product of the artist’s foundation is the potential to maintain an orderly market in the purchase and sale of the artist’s work. By creating a scholarly and sometimes scientific inventory of an artist’s work and making it publicly accessible as well as establishing an authentication process and records, an artist foundation instills trust in the market or the artist’s works and may reinforce the value works by the artists for all who own them.

The necessity for an orderly and more transparent overall art market to facilitate this wealth transfer is imperative and demands the discipline and fortitude of artists, their advisors and artists’ subsequent estates to govern and plan responsibly.


  1. Milton Esterow, "The Battle for Picasso’s Multi-Billion-Dollar Empire", Vanity Fair, 3/7/16
  2. Stephen Bayley, "The squalid afterlife of artists' estates", The Spectator, 9/17/16
  3. Milton Esterow, "The Battle for Picasso’s Multi-Billion-Dollar Empire", Vanity Fair, 3/7/16
  4. Stephen Bayley, "The squalid afterlife of artists' estates", The Spectator, 9/17/16

McAndrew, Dr. Clare. The Art Market 2019. Basel: Art Basel & UBS, 2019.
McAndrew, Dr. Clare. The Art Market 2017. Basel: Art Basel & UBS, 2017.
Sanger, Christopher. Car Market Overview. New York: Winston Art Group, 2019.

Image Sources:
1: Portrait of Pablo Picasso, 1908. Anonymous/Unknown author [Public domain]
2: Modigliani, Picasso and André Salmon, Paris, 1916. Amedeo Modigliani (1884–1920) [Public domain]
3: Picasso, Kisling, and Paquerette at La Ronde Cafe, Paris, 1916. Composite image: yiddishayt and pinterest [Public domain]
4: Image of Les Demoiselles d'Avignon (Pablo Picasso, 1907) courtesy of Dario Mastromattei [CC BY-SA (]

The opinions expressed by the author is solely her own and do not necessarily reflect those of Morgan Stanley Smith Barney LLC ("Morgan Stanley"). The information and data has been obtained from sources outside of Morgan Stanley and Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of information or data from sources outside of Morgan Stanley. Neither the information provided nor any opinion expressed constitutes a solicitation by Morgan Stanley with respect to the purchase or sale of any security, investment, strategy or product that may be mentioned.

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