What to Consider When Receiving an Inheritance
Receiving an inheritance can be both exciting and overwhelming. It can bring with it a lot of questions and decisions that need to be made. It is important to consider the implications of receiving a large sum of money, as it could significantly impact your financial situation.
This article will discuss what you should consider when receiving an inheritance, from taxes and legal issues to investment opportunities and charitable giving.
Take it Slowly
While you may be receiving a large sum of money, you are likely going to be in a state of grief from losing a loved one. It is important that you wait until your mind clears and you are ready prior to making any big financial decisions. Taking the time to consider all aspects of your inheritance will help you make the best decisions for both yourself and your family.
In Canada, there is no inheritance tax, meaning you don’t have to pay tax on the money you inherit, nor do you have to report it as income. This is because when a person passes, Canada Revenue Agency (CRA) taxes their estate directly, prior to any money being released to the beneficiaries. In short, you don’t pay taxes on the actual inheritance amount as it was already taxed as part of the estate. However, not all other countries treat inheritance the same—it is important to understand the tax implications in your country.
Pay Off Your Debts
Living a debt-free lifestyle can help you better save your money and work towards your financial goals. Freedom from debt goes beyond your financial well-being and can help improve your emotional well-being by relieving a great deal of stress. It is best to start by paying off the debt that has the highest interest rates, which is most often loans or credit card debt.
Save and Invest Your Inheritance
It’s a good idea to save and invest some of the money that you receive. This can be saving your money in a high-interest savings account, contributing to or creating an emergency fund, or investing in real estate or dividend-paying stocks. Saving and investing your inheritance gives you the opportunity to generate more income.
When receiving your inheritance, you may want to seek some professional guidance before making any decisions. This will prove helpful if you are receiving an amount of money that you have not dealt with before, or if you have not dealt with big financial decisions previously. A financial planner will be able to help you decide the best way to handle your money—devising a short-term and long-term plan.
Let Bloom Investment Counsel, Inc. help to Preserve, Protect and Grow Your Inheritance
Inheritance can be a great opportunity for financial security and growth; however, it should not be taken lightly. Taking the time to consider all of your options will ensure that you are making informed decisions about how to best use this newfound wealth.
If you are looking for a more personalized investment management service, Bloom Investment Counsel, Inc. has the experience helping high-net-worth individuals and families preserve, protect and grow wealth while taking into account your legacy goals.
We provide actively managed, customized Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.
Connect with us today. Call us at +1-416-861-9941 or email us at firstname.lastname@example.org
Established in 1985, Bloom Investment Counsel, Inc. is a Toronto-based independent, privately-owned boutique investment management firm with experience in managing in excess of $2.5B in assets over the years.
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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.