We might all have dreamed, at some time, of finding a lost treasure in the attic, for example, a piece of jewellery we could sell for enough to retire on. In real life, however, inherited jewellery is unlikely to provide that sort of money, but it may have enough value to be of interest to HMRC and even if it does not, its value would have to be taken into consideration when working out how to divide an estate in an equitable manner. With this in mind, here are four common methods of valuing inherited jewellery, along with their advantages and disadvantages.
The intrinsic value of a piece of jewellery basically refers to the value of the materials themselves and makes no reference to the skill involved in its creation or any other factors which might influence its value, for example, the degree of rarity or its age. Really the only items of jewellery for which this might be considered a suitable method of valuation would be modern, simple items made purely out of precious metals, for example wedding rings or plain gold chains. The moment you start adding in other factors, you’re likely to find the intrinsic value of a piece being significantly lower than any of the other methods of valuation.
At the end of the day, all an insurance company wants to know is how much they would have to pay to replace your item of vintage jewellery with a new one (insofar as that is possible). This is a reasonable enough approach for insurance cover, but it can lead to inherited jewellery being valued at an unreasonably high level. The reason for this is that inherited jewellery, by definition, is not new and therefore cannot be sold as new. If it were to be sold, it would probably have to be sold at a discount to its original purchase price; otherwise, people would simply go out and buy the item from new.
This is essentially the value offered by specialist companies who buy second hand jewellery for resale as jewellery rather than for its value in gold (or gems). These are very different business from “cash for gold” operations, which are generally best avoided unless you have basic items of jewellery with minimal workmanship and no gems, which you simply want to sell quickly. The value these companies will offer will be somewhere in between the intrinsic value and the replacement value and it is likely to be less than you would have received selling the items yourself as, of course, the company has to pay its overheads and make a profit, but this could be a reasonable and convenient way to value inherited jewellery.
Estate retail value is the value you would expect to get if you sold the jewellery yourself, cutting out the middleman. In principle, it should be the most accurate value, in practice it may be very difficult for an inexperienced seller to place an accurate value on the items without actually selling them, which they may not wish to do.