We have insurance for our homes, cars, health and collectibles. Jewelry as a collectible/investment should be scheduled providing you and your insurance carrier with a benchmark valuation including descriptions, images and condition. Based on the appraised value the insurance premiums and coverage will be determined for the retail replacement value of the insured jewelry.The insurance appraisal will protect you in case of loss, theft or damage for the jewelry’s retail replacement value. Updates should be done for insurance at least every 5 years to remain current with the prevailing markets.
Estate and Probate
When an estate matures with the death of a family member, the assets of the deceased need to be valued. Depending upon the size of the estate and the federal and state laws a full appraisal of the “Fair market Value” of the assets may be required. It is especially important that the appraiser chosen for this task is one the IRS will accept for their estate valuations, with proper qualifications in valuation methodology, be current on their USPAP, and have the appropriate expertise in their field, i.e., being a graduate gemologist for jewelry. Furthermore, knowledge of the IRS regulations is important.
The most obvious reason that a liquidation appraisal may be required is for a bankruptcy. However, there may be other compelling reasons to liquidate jewelry. In most cases this would be to bolster cash flow. If a liquidation appraisal is required, be sure that your appraiser has the knowledge and training to provide the correct type. If the liquidation is an orderly one, the value would most likely reflect the market value. However, if it is forced there are several methods that maybe employed by the appraiser to come to the appropriate value. Be sure your jewelry is not over or under valued in a liquidation.
If the estate does not require a full IRS appraisal, often the executor will need a listing of the deceased’s jewelry in order to distribute the items among heirs. The listing is not a formal appraisal. However, it provides an informal valuation allowing the heirs to more easily choose jewelry they want to keep or offer for sale.
When a divorce includes jewelry of significant value, it may need to be valued for equitable distribution if it is part of the marriage property. This property is often fraught with high emotions and tension. This is when a competent disinterested third-party appraiser will play an important role. Old Insurance values and remembered retail prices paid may be the cause of friction. Current values of either fair market or liquidation depending upon the situation should represent the appraised value.
A charitable donation of jewelry seems like a good idea. The donor receives an IRS tax deduction on the gift and the charity receives something of value. The taxpayer will need a qualified appraisal prepared by a qualified appraiser. The Retail receipt from the jewelry store of 5 years ago is not sufficient. Careful discussion with your tax CPA or attorney will help guide you. Choosing the correct appraiser for the valuation is critical.