You Inherited Money. What to Do With It, Step by Step

<p>The average inheritance in Canada is close to $200,000, and it usually arrives while you're grieving. It was Mom's money, and you don't want to be the one who lost it. If you've frozen, that's normal. A Danish study of about 17,000 people after a sudden inheritance found only about 1 in 3 non-investors started investing, even after the biggest ones.</p><p>So take the pressure off. Park it in a high-interest savings account in your own name, under the $100,000 deposit insurance limit at each bank. A cash inheritance isn't taxed in your hands. Somebody online will tell you to buy a rental property by Friday. It can wait.</p><p>Keep it in your own name while you think. In many provinces an inheritance kept separate stays yours if a marriage ends, and putting it into the family home can change that. The rules vary by province, so talk it through first.</p><p>A few months in savings costs very little, and leaving it there for 20 years gets expensive. Since 1900, after inflation, cash earned about 0.5 percent a year and stocks around the world about 5 percent.</p><p>Then the easy yeses: a 20 percent credit card, the RESP grant, and 3 to 6 months of spending in cash. Money you'll need in 3 years stays safe. Money you won't touch for 7 years or more gets invested simply. And spend some of it on something they'd have loved to see you do.</p><p>3 things I'd keep<br>1. Park it in your own name for a few months, and give the pause an end date.<br>2. Take the easy yeses first: high-interest debt, the RESP grant and your cash cushion.<br>3. Invest the long-term money simply, enjoy some of it, and look at the plan every year.</p><p>My inheritance guide is in my community at calmmoneycoach.com, and my email list is free.</p><p>I'm Brian Orlando, CPA, in Halifax. Advice-only planning through Calm Money Coach. No products, no commissions.</p><p>Sources include the Danish inheritance study by Andersen and Nielsen, the Global Investment Returns Yearbook by Dimson, Marsh and Staunton, Cederburg and co-authors on lifetime stock allocations, and Meir Statman. Education only.</p>