The division of jewelry in probate cases often presents unique challenges and potential for family conflicts.
Family members may develop strong attachments to specific pieces of jewelry. Whether it is a ring or necklace passed down through the family or even an item that has sentimental meaning only to one party. This may be due to a misconception that verbal promises made by the decedent govern the distribution of jewelry or even one’s beliefs as to what the decedent wanted but failed to express in writing.
This article considers some of the unique challenges posed by jewelry in probate cases, including steps needed to handle jewelry, who inherits jewelry, and how it is valued in Texas probate cases.
Handling Jewelry in Probate Cases
Protecting and insuring high-value jewelry is of utmost importance during the probate administration process. Due to its significant value and portability, specific measures should be taken to secure and insure the jewelry effectively. This not only can help ensure that the asset goes to the rightful heir or beneficiary, it can help the executor or personal representative avoid liability for any loss.
Securing Jewelry
To ensure the safety of valuable jewelry, the executor or personal representative should take steps to secure it during the probate administration. This can be done by physically taking custody of the jewelry and implementing measures such as storing it in a secure safe or renting a safety deposit box at a reputable bank. These precautions help minimize the risk of loss, theft, or damage to the jewelry.
Insuring Jewelry
Obtaining appropriate insurance coverage for high-value jewelry is crucial while the probate administration is pending. Standard homeowners’ insurance policies typically impose limits on coverage for assets like jewelry, making separate insurance necessary. To adequately protect the valuable jewelry, obtaining a separate insurance rider or policy specifically tailored to its value and characteristics is advisable. This ensures that the jewelry is adequately covered against risks such as theft, loss, or damage. It is important to note that the estate should bear the cost of insurance premiums.
Jewelry is Personal Property
There are a number of different types of assets that can be described as “jewelry,” such as precious metals, gemstone jewelry, costume jewelry, heirloom jewelry, and even luxury watches.
Texas probate law divides property into real property and personal property. Personal property includes everything that is not real estate, basically. Thus, jewelry is personal property.
Who Inherits the Jewelry?
As personal property, one has to look to either the will, if it is valid, or Texas law to determine who inherits the property.
When There Is a Will
In most wills, the will itself will identify various items of personal property, such as jewelry, and say who gets the property. This is referred to as a “specific bequest.”
The will may also dispose of personal property according to a written memo to be included with the will.
Absent these options, the will may include a residuary clause that says who gets the balance of the estate–which will likely include the jewelry. In this case, as explained below, either the independent executor in an independent administration or the court in a dependent administration can decide who gets the jewelry or whether it is sold and the proceeds are distributed.
When There Is No Will
If there is no will, one has to consider the intestacy laws. These laws say what percentage of the estate property the parties get. One hash to first determine whether the jewelry is separate or community property. Then one has to consider who the surviving family members are. If there is a spouse and the jewelry is separate property, the surviving spouse takes 1/3 and the children get 2/3. If it is community property, it all goes to the surviving spouse, but if there are children from outside of the marriage, then the surviving spouse gets 1/2 and the children divide 1/2.
Having figured out these percentages, one then has to consider whether the probate is independent or dependent. With an independent administrator, the administrator generally gets to decide what property is distributed to whom. For example, with jewelry, they can award that to themselves or others and balance out the difference with other assets. It works this way as the intestacy laws only provide for a percentage of the total estate, not the types of assets. The law does not require personal property to be partitioned if there are other assets that can be used to balance out the distributions. This is why it is critical that the parties are comfortable with who is appointed as the independent administrator.
Similar rules apply in dependent administrations. The distinction is that the judge is the one who decides who gets the jewelry. The executor or personal representative will usually present the court with an appraisal and information about the other assets for distribution and the court will apply the rules set out in the will or estates code for the distribution. If the jewelry is the only asset in the estate and the parties cannot work out terms for distribution, the court may order the jewelry sold and the proceeds distributed.
Appraisal for Jewelry
Jewelry often holds sentimental value for beneficiaries or heirs that far exceeds its monetary worth, and this emotional attachment can complicate probate cases and lead to disputes among beneficiaries.
While sentimental value is significant to individuals involved, the legal distribution of assets during probate is generally based on the fair market value at the time of the distribution.
If the estate includes jewelry that is deemed to have significant value, it is generally advisable for the executor or personal representative of the estate to obtain an appraisal for the jewelry.
There are a number of options for getting appraisals. This can include having a jeweler inspect the item or even using comparable data. What is acceptable depends on the instructions in the will or absent such instructions, agreement of the parties, or instruction from the court.
For higher-value jewelry, the IRS may also have a say in the value. Jewelry has to be reported on the Form 706 estate tax return if the estate is large enough to trigger estate taxes. In these cases, the IRS will expect the executor or personal representative to have a formal appraisal.
The Takeaway
The division of jewelry in probate cases poses challenges and potential conflicts due to strong emotional attachments and misconceptions about verbal promises. Securing and insuring high-value jewelry is essential to protect against loss or theft. Determining rightful inheritors relies on the decedent’s will or intestacy laws. Independent or dependent administration, guided by professional advice, ensures fair distribution. Appraisals play a crucial role in accurately valuing jewelry. Seeking guidance from probate attorneys, appraisers, and tax advisors helps navigate complexities, minimizes conflicts, and ensures fair handling of high-value jewelry in probate administration.
Our Dallas Probate Attorneys provide a full range of probate services to our clients, including helping with estate planning. Probate is what we do. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process.We have years of combined experience we can use to support and guide you with probate and estate matters. Call us today for a FREE attorney consultation.
Disclaimer: The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
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