Handling a loved one's estate after they have passed away is taxing, both emotionally and physically. You may have to take time away from work and could be responsible for planning the funeral. There also is an estate with a lifetime of belongings in it that you will have to sort through.
This can sound overwhelming, but it's not impossible. Start with the executor of the estate. It is the executor's responsibility to try to make sure everything the decedent owned ends up where it's supposed to. They also ensure a final tax return is filed and that other debts are paid as necessary.
Family possessions have typically been absorbed by heirs but trends may be changing. Younger generations are reaching life milestones, like marriage or homeownership, later in life. They might not have space to store an antique or simply don't want one.
Minimalism, a popular lifestyle that preaches getting rid of excess in favor of life-based experiences, has taken hold among millennials. From Marie Kondo to countless bloggers and HGTV hosts, people are finding joy in letting go of possessions.
Despite this trend, some items may still hold value. For instance, vinyl album sales have grown for 14 consecutive years even with the mass adoption of music streaming services.
If you're stuck with decades worth of stuff, here are a few ways to sort it all out, and cash in on some of it.
One of the first things you should do, according to Julie Hall, the author of "The Boomer Burden: How to Deal With Your Parents' Lifetime Accumulation of Stuff," is to ask for a wish list from heirs. From there Hall suggests having a personal property appraiser walk through the home to determine what still holds value and what doesn't. "Understanding the value of items from an objective third party also promotes equitable distribution among heirs, which will help to minimize family feuds," Hall said in an op-ed.
The personal property appraiser will assign a fair market value to the items but that doesn't mean the market value is equivalent to what someone else will pay. Keep in mind that you may have to allow for some wiggle room when selling antiques.
While passing through the house you will likely find a myriad of documents and papers, everything from junk mail to important financial accounts. It's essential to sort all of this. Junk should obviously be thrown out, but deciding what to do with important documents can be tricker.
Initially, anything that looks important should be stored in a safe place and should be organized to make retrieving documents less of a chore. Digital scanners can make this easier by allowing you to make digital copies and create a searchable filing system.
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Separate emotions when selling
Sentimental value plays a large role in this process. Emotional attachment does not equate to higher monetary value so it is essential that you separate your emotions before trying to sell anything.
When the time comes to sell there are lots of options offered by various digital marketplaces. Facebook Marketplace, Poshmark and eBay are all popular sites to sell used items. Gary Vaynerchuk, the serial entrepreneur and investor, sincerely believes that "flipping'" forgotten items can help people struggling financially turn their lives around.
Once you have determined what to sell and keep you'll next need to determine what gets donated and what gets tossed.
Before you drop off anything at a donation center, research local donation centers in your area. If you don't have a vehicle or don't want to deal with transporting items, find centers that offer free pick-up.
Depending on the size of the home and the amount of junk, it might be wise to rent a portable dumpster. Hall notes that whenever cleaning out a house it is always better to start at the top of the house and work your way down.
Inherited assets, homes, and taxes
If you sell a home/estate you will likely trigger a capital gains tax. Capital gains are taxes relating to the profit generated when an asset is sold.
When a property is inherited the IRS establishes a fair market value, which will influence future taxes when the property sells. You will pay taxes on the difference between the fair market value and the time of inheritance and the selling price.
Hall, who has helped thousands of clients, found that the ones who fared the best were the brave ones who discussed everything with their loved ones before they passed. They were able to go over legal documents and establish a system to follow.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.