Receiving an inheritance is often described in financial terms — an amount of money, a property, an investment account. But for the person receiving it, an inheritance is rarely just a financial event. It typically follows the loss of someone close — a parent, a spouse, another family member — and arrives at a time when grief, not financial decision-making, is often the more pressing reality.
There is rarely a financial reason to make major decisions about an inheritance immediately. Cash can sit in a high-interest savings account, investments can largely remain as they are temporarily, and most major decisions — paying off debt, investing, giving some away, changing your work situation — can wait weeks or months without meaningful financial cost. The pressure to "do something" with an inheritance quickly is rarely a financial necessity.
The First Steps: Practical, Not Strategic
Before any strategic decisions about what to do with an inheritance, there are practical steps that simply need to happen — and these can typically proceed at whatever pace feels manageable.
Understand What You Are Actually Receiving
Inheritances can take many forms: cash, non-registered investment accounts, RRSPs or RRIFs (which have specific tax treatment when inherited), real estate, life insurance proceeds, or a share of a business. Each type has different practical and tax implications, and understanding what you are receiving — in concrete terms — is the foundation for everything else.
Get a Clear Picture of the Tax Situation
In Canada, there is no inheritance tax paid by the person receiving an inheritance — but the deceased’s estate may owe tax as a result of "deemed disposition" rules, where assets are treated as having been sold at fair market value immediately before death, potentially triggering capital gains. This tax is generally the estate’s responsibility, not the beneficiary’s — but understanding whether and how this has been handled (often by the estate’s executor) is part of understanding what you are actually receiving.
Inherited RRSPs and RRIFs are a specific case: if you inherit a registered account from a spouse, it can often be transferred to your own RRSP or RRIF on a tax-deferred basis. If inherited from a parent or other non-spouse, the tax treatment is different — the account is generally collapsed and the value is taxed as income to the deceased’s estate (or, in some cases, directly to the beneficiary, depending on the situation) rather than transferred tax-free.
Common Pressures — and Why They Deserve Scrutiny
"You Should Pay Off Your Mortgage"
This is one of the most common pieces of advice received after an inheritance, and it is not wrong for everyone — but it is not automatically right either. If your mortgage rate is relatively low and your other financial goals (retirement savings, for example) have room to benefit from continued investing, the mathematically optimal choice may be to invest rather than pay down low-cost debt. This does not mean paying off a mortgage is wrong — the emotional value of being debt-free is real and legitimate — but it is a choice, not a default, and deserves to be made deliberately rather than automatically.
"You Should Invest It With [Family Member’s Advisor / Bank]"
An inheritance can attract well-meaning suggestions from family members about where the money should go — sometimes toward an advisor relationship that may not be the right fit for your situation. Taking time to evaluate options — including whether a fee-only, independent approach might serve you better than continuing a relationship that was established for someone else’s needs — is a reasonable and common step, not a rejection of family input.
"Now You Can Finally [Make a Major Life Change]"
An inheritance sometimes coincides with a desire to make a significant change — leaving a job, starting a business, relocating. These can be entirely appropriate uses of an inheritance, but the timing — immediately after receiving funds, often also immediately after a loss — is not always the clearest time to evaluate a major life decision. Separating "what does this inheritance change about my finances" from "what life changes do I want to make" as two distinct questions, considered on their own timelines, can help avoid conflating financial windfall with emotional readiness for major change.
Integrating an Inheritance Into Your Existing Plan
Rather than treating an inheritance as a separate pool of money requiring its own strategy, it is often more useful to ask: how does this change my overall financial picture, and does my existing plan need to be adjusted as a result?
| Question | Why It Matters |
|---|---|
| Does this change my retirement timeline? | A meaningful inheritance may accelerate retirement goals, change how aggressively you need to save, or open options that were not previously on the table |
| Does this change my risk capacity? | Additional assets may mean you can afford to take on more (or less) investment risk in your overall portfolio, depending on how the inheritance is allocated |
| Does this affect my estate planning? | A significant increase in net worth may warrant updates to your own will, beneficiary designations, and potentially trust considerations |
| Are there tax-efficient ways to deploy this? | If you have unused RRSP or TFSA contribution room, an inheritance can be a natural source of funds to use it |
If the Inheritance Includes Real Estate
Inherited real estate — a family home, a cottage, or other property — carries its own set of considerations: whether to keep, sell, or rent the property; how the property’s value and any capital gains are treated for tax purposes; and, if shared with siblings or other beneficiaries, how decisions about the property will be made jointly. Property inherited jointly with others can create complexity if beneficiaries have different preferences (one wants to keep the property, another wants to sell) — addressing this directly and early, rather than letting it remain unresolved, tends to prevent larger conflicts later.
Inheriting From a Spouse
Inheriting from a spouse carries its own considerations, separate from inheriting from a parent or other relative — not just emotionally, but practically: spousal rollovers for RRSPs/RRIFs and the principal residence exemption for a jointly-owned home often apply differently, and the surviving spouse’s own financial plan (income needs, CPP/OAS, pension survivor benefits) becomes the immediate planning context rather than a future consideration. This scenario is significant enough that it warrants its own dedicated planning conversation, ideally with both the emotional and financial dimensions acknowledged.
It Is Okay to Feel Conflicted
Receiving an inheritance can bring up complicated feelings — grief alongside financial relief, guilt about benefiting from a loss, or tension within a family about how an estate was divided. These feelings do not need to be resolved before financial decisions are made, and financial decisions do not need to wait for these feelings to be resolved either — the two can proceed on separate timelines, each given the space they need.
If you have recently received, or expect to receive, an inheritance, the most useful first step is often simply organizing the practical information — what you are receiving, in what form, and what (if any) tax matters are still being handled by the estate — without feeling obligated to decide what to "do" with it yet. The decisions about integrating an inheritance into your broader financial picture can happen on whatever timeline feels right, once the practical groundwork is in place.
The Women’s Inheritance Financial Checklist
Receiving an inheritance? A practical, no-pressure guide to understanding what you have received, avoiding rushed decisions, and integrating it into your financial future — at your own pace.
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