House sale proceeds

[k3am]

A clicky poll, since I like polls. 

We've accepted an offer on my mom's house. We will net proceeds in the mid six-figure range. My mom is in memory care. Insurance will cover the next 1-1.5 years. After that, her monthly income will cover ~30-40% at her current care costs, but those will likely go up. So the funds need to be semi-liquid. The goal is to keep her comfortable in memory care and living her best life with her new memory care boyfriend. Mom is almost 77 and frail but has a goal of living forever. 

Recommendations on what to do with proceeds?

Weird dynamic at play: My brother in law has financial power of attorney. If he somehow kicks the bucket, then I'm up next, but that is (thankfully) not likely. Everyone in my sister's family seems to refuse advice to talk to an elder attorney or financial advisor. I couldn't even convince them to hire people to help clean out the house because they would do it by themselves and get to it when they get to it. Finances are the ONE area though that they'll at least take my (or my DH's) advice. I'm quite confident that if I come up with a recommended and thought out strategy, he'd be open to it. 

[archiethedragon]

Calculate what she needs from the proceeds over the next five years. Put that in a high yield savings account. Invest the rest. Going forward make it a goal to keep the next 5 years of her needs in cash. On a yearly basis take money out of the investment to keep the liquid savings at that 5 year goal.

[supertrooper1]

High yield savings and CDs seem to be at about the same rate right now, so I would put it into a HYSA. If HYSA interest rates drop in the next few years, then you can reassess. But I would be hesitant to invest it in the stock market when you don't have time to make up losses when riding the stock market waves.

[cricketwife]

I’m in a similar situation except I have POA for my mother. I have her funds in cds. I agree that if you can do as well with HYSA that would be better. The thing about financial POA is it’s very, very difficult and cumbersome to prove. So once I established it at my mom’s bank, I wasnt going to start chasing the best HYSA and proving my status to other banks. So I keep her money at her bank which has mediocre interest rates on savings but decent cd rates. So in addition to the advice about how to invest, I would look at the actual options at her bank and see what the best options are within their offerings.

[k3am]

cricketwife, I haven't even considered the legwork of opening a new HYSA. POA with her bank has been ridiculously easy so far. My sister (who was at some point POA) was added to her account in the 90's, and I was added a couple years ago. Her personal banker and branch manager have known my mom, my sister, and me for years and I think they were just happy not to have to deal with her anymore. Emailing her banker now to see what they can do...

[aspentosh]

HYSA gets my vote, though I'd be open to 1-2 year CDs for "smaller" chunks of cash.

I would not touch the stock market for anything that needs to be used in this scenario within 5 years.

[k3am]

In a complete turn of events, BIL has announced that he'll be working with a financial advisor. I am pleasantly surprised. And curious to see what he recommends vs. my thought of HYSA for most and laddered CD's for other funds if we can get a good return. HYSA is ~4.35-4.7% right now, CD's as much as 5.10% that I've seen. We are not expecting the fed to cut rates this quarter, but it's highly likely to have 1-2 this year, according to our managers meetings at work (banking).. so locking in a decent yield is appealing.

[mae0111]

k3am - a financial advisor that is paid on commission is likely going to recommend whatever will pay him/her the most. Your mom needs the money. I’d maybe try to push him toward a HYSA if you can.

[k3am]

Mar 16, 2024 19:46:03 GMT -5 mae0111 said:

k3am - a financial advisor that is paid on commission is likely going to recommend whatever will pay him/her the most. Your mom needs the money. I’d maybe try to push him toward a HYSA if you can.

I am okay with him talking to a FA and it’s one he’s worked with before. I am in the HYSA or CD camp, but can get on board with the advice above of keeping 5 years liquid and considering investing some of the excess.