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Managing an inheritance

By Karli Vezina

Family discussions around inheritance can be tough. Depending on your family's cultural background, talk of inheritance means talk of death so for many families, it doesn't happen. If we could squeeze a little closer to our comfort zone and manage the conversation with loved ones, it could save a lot of strife down the road.

Although it's been difficult to pinpoint exactly how much is about to be passed down due to market factors, financial analysts believe there will be an unprecedented shift in wealth from one generation to the next between now and 2040.

A study done by the Bank of Montreal Retirement Institute in July 2009 took a look at how those who stand to inherit that wealth have planned for it. When asked if they spoke with a financial adviser, more than 75% said no.

Handling inheritance can be tricky so it's helpful to see the full terms of the inheritance before planning anything. Expectations often do not meet reality for many reasons including tax liabilities, legal fees, charitable donations, and poor planning. This is why talking about inheritances before a loved one passes is so vital, despite the feeling it's taboo or impolite.

Olev Edur from has some advice for what to do when you inherit a lump sum.


It can take a year or more to settle an estate, liquidate items, pay debts and file tax returns. This could impact your final inheritance amount. There’s always the possibility that other heirs may want to contest the will in court. This could take time. Christine Van Cauwenberghe, assistant VP of tax and estate planning at Investors Group in Winnipeg, advises, “Just park the money for a few months."


Doug Carroll, VP of tax and estate planning at Invesco Canada in Toronto, agrees it pays to sit on your inheritance for a while. He suggests making a whole new financial plan when you're ready. Carroll says, “Your priorities may change once you’ve received the money. You also need to incorporate that money into a new plan.” You may want to invest instead of paying off the mortgage for a better return on investment. Depending on your province, inheritance is seen as a gift and cannot be divided once divorced. Keeping inheritance money separate from other assets is something to consider too.

If you've got a financial windfall in your future, avoid the pitfalls and speak to a financial adviser you trust.

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