When someone dies, they might have left behind a treasure trove of jewelry. How do you go about appraising and valuing this jewelry? What are the factors that affect its value?
The reason why we would want to find out the value of this jewelry is threefold:
- First of all, if we are going to be doling out equal shares of jewelry among other relatives, then we must know what each piece of jewelry is worth.
- Secondly, if our intention is to sell any of it, then we need to protect ourselves from those who would devalue it and then turn around and sell for much higher.
- Last, if we intend to keep the jewelry for ourselves then we may want to know exactly what we have inherited, find out how to properly care for it and buy insurance for it. We need to sort out the items that are costume jewelry vs the items that are of high value.
In this article, we will provide a beginner’s guide to appraising inherited jewelry. By following these tips, you can get a good idea of how much your jewelry is worth.
Table of Contents
What Factors Affect The Value of Jewelry
Inheriting a windfall of jewelry can be exciting, but it can also be daunting if you don’t know where to begin.
How do you determine the value of all these pieces? And what factors will affect that value?
Here are a few things to keep in mind:
Retail Market Value
You have heard of or have seen price tags that say “MSRP” and then the price of the item is listed, from clothing to cars.
This means “manufacturer suggested retail price.”
This is one of the ways that we can get an idea of the competitive value for items to be sold on the market at retail.
Appraised Value
This is the amount that a professional Certified Appraiser will deem the items to be worth for insurance purposes.
This value is inflated because it takes into consideration the future rise of precious metals and gemstones, and what it could cost at that future time to replace it.
Many pieces of inherited jewelry are antique and have an additional intrinsic value that goes far and above the retail value because antiques are not so easy to replace.
The appraised value will account for this.
Fair Market Value
While the retail market value is the price under ideal circumstances, the fair market value is what you could get if you sold the item “as is” without any repairs.
This is the amount that you can expect to get if you were to find a buyer apart from having it sold brand new in a jewelry store.
You must know the market for items that are considered “used” even though all fine jewelry can be reconditioned to look as new as the day it was purchased, and can be no worse for the wear.
Nevertheless, the fair market value will be determined by the knowledge of what is the least amount vs the most amount of money that can be expected to get from private sales and then striking a balance between the two.
If you know that your mom’s diamond ring originally cost $5,000, then it is fair to say that you should be able to sell it privately for half that amount.
This is the fair market value and it is very much like the Kelly Blue Book is for automobiles.
Fair market value is mandated by law to be the formula used to determine the value of items owned by a deceased person for tax and distribution purposes.
Even though there may be Appraisals written or receipts on jewelry, the Fair Market Value will be used to divide jewelry among heirs and for Capital Gains tax purposes.
Metal Content
The value of your jewelry will also be determined by the type of metal it is made from.
Is it solid gold, or gold-plated? Is it sterling silver?
These are all important factors to keep in mind.
The karat weight will also be a factor.24k is 100% pure gold while 14k is only 58.5% gold with the remainder being made up of other metals like silver, copper, and zinc.
The weight of the metal is also important. Heavier pieces will be worth more than lighter pieces because there is simply more metal to work with.
Gemstones
And finally, the value of your jewelry will also be affected by the type and quality of gemstones used.
Diamonds, for example, are graded on the Four C’s scale: carat weight, clarity, color, and cut. The better the quality of these four factors, the more valuable the diamond will be.
In addition to diamonds, other precious stones like rubies, emeralds, and sapphires are also valuable.
But it’s not just the type of gemstone that matters – it’s also how many are used. A piece of jewelry with multiple large gemstones will be worth more than a piece with just one small stone.
How To Determine The Value of Inherited Jewelry
Determining the value of inherited items can be stressful for a Trustee to determine if the jewelry is to be divided among several people.
Because the Appraised and Retail values cannot be used to determine value, then the Fair Market Value will have to be used.
Secondary Markets
This requires that someone has a knowledge of the secondary market for each item. Secondary markets for diamonds and precious gemstones are different than they are for gold and platinum, but jewelry contains both most of the time.
There should be an understanding that this process is going to take some time to accomplish, depending on how much jewelry is involved.
A person charged with this task must do a few things:
- Take the items into a few different jewelry stores and bring Appraisals and receipts if any of those are available with you. Tell the jewelry store that you are thinking about getting insurance for each item, but you want to know what it is that you have first. The jewelry store will be happy to help you determine and sort out the junk from the valuables. Write everything down so you don’t forget. Keep in mind that Appraised Value is higher than Retail or Fair Market value, but you will want all three values when all is said and done.
- While you are in the jewelry stores, look in their cases for items that are fairly identical to the items that you have inherited. You are going to want to see what they are selling theirs for to get an idea of Retail Value. If the store has a one carat diamond ring that is of decent quality for sale, and you do too, then you can presume that yours will fetch close to the same price if you sell it for retail value. Write everything down so you don’t forget.
- Go on eBay and Etsy. If you have a gold bracelet for example, and it is 14K gold, you will be able to find thousands there for sale too. Looking at the gram weight and perhaps if there are any name brands that bring a higher price, determine what the average price is for items that are similar to yours are being listed. Make sure that the gram and karat weight are close to one another, as well as any gemstones and their quality. This will give you the Fair Market Value of your items. Write everything down so you don’t forget.
Now you have an idea by taking the three different pricing structures above and then using this information for determining the median price for your items.
This certainly requires some footwork to do, but you will not become a victim of swindling if you take your time and do it.
Jewelry Appraisal
The word “Appraisal” is a loaded word because there are several different types as touched on above.
Jewelry stores will offer you either verbal or written appraisals that are done “in house” and, generally, there is no independent Certified Gemologist on hand.
The verbal ones are free, whereas the written ones will cost you around $50 per item and may, or may not, come with a photo.
The verbal appraisal will do you little good, simply because the store may be devaluing your items in the hopes that you may be wanting to sell or trade to them.
If you have them write up the written appraisals for your items, then you will need to find out if they are using Fair Market, Retail, or Replacement values on them and indicate which you prefer.
You are paying for it, so be specific about what you want them to do.
If you want to buy insurance for your items, then you need to ask them for the name of an Independent Certified Gemologist Appraiser.
This is the person who will give you the replacement value for your items, but it may cost you in the neighborhood of $125 to appraise each piece.
If you do not have the means to afford this kind of appraisal, then you will have to settle for letting the jewelry store do them, keeping in mind that they are not going to want to put the future replacement values in the event that you may want to sell to them.
There is a conflict of interest, but you can overcome this by telling them that you are keeping the items.
Period.
How To Appraise Your Own Inherited Jewelry
Many people are looking to appraise their own jewelry these days and it is perfectly understandable why.
The reasons may be that you are looking to insure the items, or perhaps you are curious as to what they might be worth.
However, there is one thing you need to keep in mind:
You are not going to be able to officially appraise your own jewelry, in writing, in any meaningful way. This would be like handing you a blank check, and it isn’t going to fly – with anyone.
If you were to write down an item description and give it a value, an insurance company will not utilize that information to sell you a policy and will insist that you have a professional Appraisal done first.
Lawyers will also not take your word for it in a divorce or estate planning situation, and will make your life miserable by coming up with proof for every detail you submitted.
It does not make a difference whether you purchased the jewelry or you inherited it, and even if you have receipts for it you must have a third party written Appraisal.
If you have done the steps above, you will have a keen idea of what your items are worth depending on what you wish to do with them.
For further information, we have written a short article on jewelry appraisals to help you decide.
Tips For Selling Inherited Jewelry
You’ve done all the footwork, got an appraisal, and now you’ve got a good idea of what your inherited jewelry is worth and want to sell it. Here are a few tips to get the most out of your sale:
Consign With A Reputable Jeweler
If you wish to sell your items in a local jewelry store, then be advised that it can take a year or more to do so unless the items are in high demand, or is a popular name brand/Designer.
We do hope that you have a jewelry store that has a high level of integrity, because too many of them will tell you that, because it is “used,” the value will be much lower.
Not true.
If they have cleaned and polished up the items for you, they will look brand spanking new and should be every bit as much in competition with their new items as if there wasn’t any wear and tear.
What often happens is that they will get you to consign your items to them at a lower “used jewelry” price, tell you that they will collect 40% of the sales price, and then they will later inflate the price once they have it in hand.
So if you agreed to take 60% of $1000 for your item, then you will end up with $600 when it is sold.
That is all they are obligated to give you because that is what you agreed in writing to take.
But the sleight of hand is after you walk out leaving it to be sold. They then mark up your item and double the selling price to $2000.
Well guess what… you still only get $600 dollars, but the store pockets $1400.
Make sure that this is not happening to you!
How will you know?
Send in a friend a week later to try on several items and also the item that you have there, and ask the store for the price.
Busted.
Selling via Online Auctions
If you wish to bypass the jewelry store and go straight to eBay, then this will net you the same as you would get from the jewelry store.
The reason for this is because eBay charges 13% and Paypal also will charge a percentage too.
While this seems reasonable, keep in mind that the competition is so massive on eBay for jewelry that people are forced, by necessity, to sell far below retail and even below market value.
At least at a jewelry store, you will not have that competition and will get closer to retail value for your items if the store is honest.
One of the reasons why you will not get a fair price on eBay is because there are a ton of stolen items listed and the thieves are happy to take far less for items that they did not pay for in the first place.
Know The History of Your Inherited Jewelry
If you do decide to sell, make sure that you know approximately when the items were made.
Jewelry that is Antique has a much higher value than modern jewelry, gram for gram.
This intrinsic value must be taken into more consideration than most jewelry and should be sold as such in terms of pricing structure.
If you have an item that is from the Art Deco period, that is, made in the early 1920’s, then those are highly sought after, as are diamonds and gemstones from that Era.
Diamond cuts and shapes from early periods such as Old European or Old Miners cut diamonds are two of the most beautiful and valuable cuts because of the way they reflect light and brilliance.
Know what you have!
Gemstones such as emerald, ruby and sapphire that were mined and cut during that era and up to the 1950’s are usually not heat treated or fractured-filled to enhance appearance.
These untreated stones command 10X’sthe amount than their counterparts that have been messed with.
You may have to get those items appraised, or at least looked at, by an Independent Certified Gemologist to determine this.
FAQ’s About Inherited Jewelry
Is jewelry considered part of an estate?
Jewelry is indeed part of an estate the moment the original owner passed away. How the estate is then handled will determine how the jewelry is valued and eventually distributed.
Is jewelry included in probate?
Jewelry is included in Probate because it is considered part of an Estate just the same as any item that the original owner had when they passed away. Probate can be avoided entirely if the deceased had made a Living Trust prior to passing away.
Is inherited jewelry taxable?
Inherited jewelry is not taxable until you sell it. Then the tax is considered as “capital gains” on the amount that you receive above the Fair Market Value for each item. The taxable amount is 28% for capital gains.
What do you do with jewelry after someone dies?
When someone dies and their belongings are collected, hopefully by a Trustee, the value of these items should first be determined before dividing or releasing them to heirs.
A Trustee will be the one who is tasked with this and it will take some time to do, depending on how much was involved. A Trustee will have to use “Fair Market Value” to determine how much money items are worth.
Is it OK to sell inherited jewelry?
It is just fine to sell your inherited jewelry if you like. We imagine that the purpose of inheriting anything is to get the full use of it whether or not you keep it or sell it.
Final Thoughts
Just because you did not have to buy jewelry that is inherited does not mean that it should be treated with less value than if you did.
Most often, the person who left their jewelry to you will want you to have the maximum pleasure or sale value of it.
It is a gift, use it wisely!