Including Jewelry in North Carolina Estate Plans

June is a popular choice of month for weddings. At the end of this past June, same-sex marriage was legalized following the recent Supreme Court decision. Our Chapel Hill estate planning attorneys previously posted about estate planning for newlyweds and planning for infants in growing families. With the potential for more nuptials this season, how should couples include engagement rings and wedding bands in their estate plans?

• Insurance. Most homeowners’ insurance policies offer insufficient replacement costs for lost, stolen, or broken jewelry. Some policies offer a rider that covers a specific piece of jewelry. However, individual jewelry insurance policies can also be purchased. Insurance can help protect the value of the asset for years to come. Insurance is an important item that might be overlooked during relocation. Insurance riders and special policies should be updated whenever the couple moves to prevent a lapse or cancelled coverage.
• Appraisals. Most jewelry insurance providers require an appraisal, but even couples who do not maintain special insurance might want to acquire an appraisal independently for valuation purposes. If an individual is mindful about equally dividing their estate, the monetary value of jewelry can help in making these decisions.
• Sentimental value. In some cases, the financial value of a piece of jewelry is a lesser concern and an individual might leave a piece to a loved one who has a deep sentimental attachment to the item. Individuals can discuss family members’ views regarding special items to help align values in an estate plan.
• Provisions. When including distributions of jewelry in a will, an attorney can help the testator clearly identify and detail how the jewelry is to be distributed. The testator might wish the piece to be sold and the proceeds divided among family, or they might include a letter of wishes explaining their hopes for the future use of the item(s). To ensure jewelry is not misidentified, detailed provisions should be included, and photographs can help accurately distinguish specific pieces. Appraisals (as noted above) are generally helpful with identifying items.
• Tax. Depending on the value of the jewelry, tax issues might need to be addressed. The value of the assets might be included in the decedent’s taxable estate, and, depending on the size of the estate, estate tax might be due. Discuss ways of mitigating tax liability with an estate planning attorney. Jewelry collections can be held in trust, with a Limited Liability Company, or with other tools that help reduce tax requirements.