6 Money Moves To Make After an Estate Sale
According to EstateSales.net, the average estate sale grosses around $18,000. In some cases — bankruptcy, divorce, IRS troubles — creditors and the courts decide what to do with the proceeds for you.
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In other cases, like the death of someone who named you as a beneficiary, you pocket the cash. The question then is what money moves you should make first to ensure a pile of money doesn’t become a pile of regret. Here are the right steps to take.
1. Sell Whatever Doesn’t Sell
It is possible to plan, organize and host an estate sale DIY-style — Martha Stewart Living even created a how-to guide; however, it’s a complex and often frustrating process with a lot involved and at stake. As a result, many people hire professionals because if the sale goes well, the service can pay for itself.
One such company is The Estate Pros, and its website states, “Your estate sale professional will determine if there are any unsaleable or marginal items and either dispose of them or donate them to charity. The remaining estate sale items of value are organized, tagged, priced and staged throughout the approved areas of your location.”
Professional pricing is an especially valuable service because, according to Estate Pros, “the homeowner usually decides what to keep, dispose of or donate to charity” based on what is left over from the sale.
There’s a fourth option that should be your first money move after an estate sale, though. The unsold items deemed saleable and professionally priced by experts should be easy to convert to cash on familiar platforms like eBay, Facebook Marketplace, Poshmark, Craigslist and OfferUp, even if they originally went unsold.
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2. Pause, Think and Strategize
Flush with cash, perhaps for the first time, you might be tempted to buy a Harley or place an $18,000 bet on that hot new biotech stock you overheard the guys next to you talking about at the barbershop.
Don’t.
According to Progressive, the first thing you should do with any significant windfall is nothing. That means don’t spend any of it and don’t tell anyone about it — unless you want new best friends.
3. Make Your First Purchase Professional Advice
According to H&R Block, you might owe capital gains taxes on the proceeds of an estate sale. Things can get especially complicated if the sale of a property contributed to the proceeds.
Even if you didn’t sell a house and even if you don’t have a tax obligation, Progressive suggests investing in professional advice as your very first purchase with your newly acquired stack of cash. A financial planner can help you anticipate tax challenges and tailor a plan on how best to leverage the money to secure your financial future.
4. Build an Emergency Fund
If the proceeds from your estate sale are substantial, you might have a level of flexibility to pursue goals and make progress toward financial priorities that you’ve never experienced before. A financial advisor can help you optimize what you have to get to where you want to be.
If you choose to go about the process alone, T.RowePrice echoes Progressive in saying that step one is to build an emergency fund of three to six months of expenses if you don’t already have one. You might be eager to pay down debt, but without savings, the next unforeseen expense will force you to reach for a credit card.
5. Pay Down Debt
Now it’s time to unburden yourself from toxic debt, like revolving credit card balances. You might be raring to put your money to work in the stock market, but since the interest you’re paying on the balances you owe is almost certainly higher than the gains your investments are likely to earn, clearing debt comes first.
6. Invest the Rest Wisely … But Leave a Little for Yourself
Financial experts agree that with money in the bank and your lenders paid, you’d be well-served to invest the remaining balance in a retirement fund, brokerage account or both. If you have an employer-based 401(k), contributing enough to get the maximum company match should be your first move.
Finally, set some aside to invest in a vacation or some other kind of measured splurge. You just stumbled into a lot of purchasing power, and using a portion for something you otherwise wouldn’t be able to afford is money well spent.
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This article originally appeared on GOBankingRates.com: 6 Money Moves To Make After an Estate Sale
