Your Inheritance: The Gift That Keeps On Giving

Time for a pop quiz. Let’s say your great-aunt Minnie dies and leaves you an unexpected and rather large inheritance. What do you do?

While it may not be the most appealing answer on the list, C is the smartest move financially.

The reality is millions of Canadians will inherit an estimated $1 trillion from their Depression-era relatives in the next 20 years. If you’re among them, what you do with your share of these assets, property and investments can make the difference between a comfortable lifestyle and a rags-to-riches-to-rags story.

Here are some financial tips to consider:

• Don't make decisions when you're grief-stricken or in shock. Consider placing the proceeds in a money market fund or guaranteed investment certificate for 90 to 120 days, while you make longer-term plans.
• Design a long-term financial blueprint to determine your current needs as compared to your future needs.
• Treat yourself and your family to something special.
• Pay off your debts, especially those credit card balances.
• Pre-pay your mortgage to save interest costs. If you buy a new house, make a big down payment and avoid the temptation to splurge on a high-maintenance home.
• Catch up on the unused contribution room for your RRSP and TFSA.
• Consider hiring a financial advisor to help minimize the tax bite. Remember, probate fees, debts, lawyer's costs and taxes on the last year of the person's life must be paid out of the estate.
• Review your will and do some estate planning of your own.