By William C. Myers
Graduate Gemologist

One of the most concentrated forms of wealth found in some estates is also one of the most beautiful. Of course we’re speaking of jewelry, the “bling” that adorns the fingers, necks, and earlobes of many women and men. Many people draft elaborate plans for their real estate, investments, and other wealth, but jewelry is often overlooked. The intent of this article is to offer sound advice about protecting one’s jewelry assets and, eventually, providing for their orderly distribution at the end of life.

Accumulation of jewelry occurs throughout life, from wedding/engagement rings to holiday and anniversary gifts. Basic homeowner policies offer limited and minimal coverage for such goods, driven by the “named perils” clause and a maximum dollar benefit. Thus, theft of an item may offer partial reimbursement, but loss of or breakage of a diamond is not covered.

The answer to this problem is what most insurance companies call a “floater,” specific coverage for valuables like jewelry, guns, coins, etc. For an additional fee, insurers protect items and offer “all risk” coverage that includes damage or loss, as well as reimbursement for the full replacement value. To establish replacement value, the insurer requests a current written appraisal of the item(s) to be insured. This, of course, requires the expertise of a gemologist, a specialist who can determine and document the market value of precious goods. Look for practitioners who have earned the “Graduate Gemologist” designation from the Gemological Institute of America, or similar distinctions, to meet insurer’s standards. Prices for services vary; thus, ask for rate structures.

Estate planning is a process that should include provisions for jewelry, as well as other wealth. For those for whom this process is in the initial stage, a series of steps help to ease potential confusion:

1. SURVEY: Hire a gemologist to examine every piece of jewelry that one owns. They will be able to discriminate among items that have intrinsic value versus those with only sentimental value. By the way, costume jewelry also requires careful scrutiny because many pieces have achieved collectability status. Not all costume is “junk” jewelry.
2. EVALUATE: Appraisers/gemologists evaluate jewelry and establish a number that may represent retail, wholesale, or liquidation value. Like many goods, most “bling” is purchased at a stiff markup, known as retail, which may or may not reflect current value. As with most commodities, values rise and fall over time based on market pressures and jewelry generally should not be considered an investment.
3. DOCUMENT: A written appraisal, ideally with a photo of the item described, establishes a value as of a moment in time. This is invaluable to attorneys and estate executors when the orderly distribution of estate assets begins. For smaller estates, appraisals allow heirs to understand the value of goods that they receive. No one likes to talk about pitched battles among heirs over mom or dad’s stuff, but it happens.
4. PLAN: Discuss with estate attorneys what should happen to jewelry in the estate. Options include issues of sentiment such as, “This ring should go to Julie because . . . .” Alternatively, the executor can be instructed to sell all jewelry assets and distribute cash to the heirs, or heirs may be allowed to purchase specific items from the estate at the appraised value. Answers vary depending on the wishes of decedents, but please remember that it is better to make whishes known than to let executors guess about the wishes never expressed. Estate distribution works best when order and unity prevail.

Finally, be aware that we human beings are prone to procrastinate when we know that we need to be proactive. The best time to take action is now.