Receiving an Inheritance

How to Make the Most out of an Inheritance

Inheriting a significant estate can be a bittersweet experience. Typically, the passage of wealth comes with the passing of a loved one.

Investing the inheritance wisely is often the main goal for most beneficiaries, but with a multitude of investment opportunities available, setting up a strategic plan can be one of the most complex – and critical – aspects of preserving and growing your new-found wealth.

When it’s a large sum of money, you feel a sense of responsibility and don’t want to squander it.

Knowing how to invest an inheritance starts with an analysis of your personal financial needs and circumstances

If you have been given the opportunity to provide for yourself and for the people you love, you need to rank the priority of how you want to take care of things.

In my view, you should help yourself first. That means paying off debts first, such as credit card bills.

Next, it’s best to plan for the long-term. If the inheritance amount is significant relative to your usual circumstances, look to save the money for your retirement, while also using a portion of the funds to pay down your mortgage. Look to top up your tax-free savings accounts (TFSAs), maximize retirement savings plans (RRSP) contributions and, if you have children, invest in registered education savings plans (RESPs) to receive free government grants.

Another important component of the conversation around managing new found wealth includes a discussion of estate planning to determine how it should pass on to the next generation – next time it will be you passing on the wealth.

That means drafting (or revising) a will and designating both a power of attorney and eventual beneficiaries, be they individuals or charitable organizations. Purchasing a life insurance policy with a death benefit can help cover the eventual tax bill successors will need to cover when they inherit whatever remains of the estate.

Whatever the specific strategy, building a balanced portfolio with diversified investment and income streams is the best approach for maintaining and growing your new found capital.

Your Inheritance

I’m here to help.

If you or someone you know recently came into an inheritance, contact me directly so we can set-up a plan that will best utilize the new wealth in the most appropriate manner for your particular situation.

Sincerely,
Nathan