Inheritance Advice

[macw1960]

So very unexpectedly today I discovered I was left a large sum of money from an inheritance. I'm still in disbelief over this and not sure what is the best course of action to take. We have no debt other than our mortgage.

Should I pay the 15% I am entitled to pay on our mortgage yearly until our mortgage renews in almost 3 years, invest or put it into savings.

We don't really have any necessary needs or wants at this point. So some advice would be great please.

[flemeth]

First congrats. I would suggest that you put down the 15% if you are paying high intrest

[lizzie bargain]

Congrats-take your time to decide. I agree with the mortgage idea. If you have enough to pay out the mortgage, it might be worth asking what the payout penalty would be at this stage. If you are not interested/able to pay out now other options are topping up your TFSA's and RRSP's if you have any to top up. You could invest these as conservatively or aggressively as you choose. I don't know if you have children and RESP's but if so putting money in here if you have not already done so will get you a 20% govt grant as well. Good luck with whatever you decide!

[brunt]

In most cases, I would suggest paying off debt as the first step.

Be aggressive, ask the maximum that you can pay off, and the maximum amount by which you can raise your payments as well. There are the rules, yes, but there is sometimes some flexibility, especially if rates have gone up since you locked in (and it wouldn't hurt to point that fact out).

We once talked to our guy at the bank, and he offered us the ability to pay it off entirely without penalty. Mind you, this was a Credit Union, but this was after rates had fallen even. He explained to us that he has rules that he has to follow for his entire set of mortgages. As long as he follows that, head office is happy. Never hurts to ask.

[Nina1]

Congrats! What a wonderful thing to have to ponder......backyard, feet up, cool beverage....take your time! Enjoy and please let us smartcanckers know what you decide!

[super807]

I would pay the 15% yearly amount, and I would find out if you can increase your payments. Our mortgage allows us to increase our payments up to double without penalty, and that doesn't affect the annual % we can also pay directly to the principal.

If the inheritance is enough to cover the entirety of what is left on your mortgage, in 3 years when this term is up, I would then pay off the remainder.

Even if your rate is low, it won't stay that way. Just this morning on BNN they were talking about some forecasts for increasing interest rates several times over then next 18 months, which is speculation, I know, but we do know rates will eventually increase.

Even with low rates, paying off debt is a guaranteed rate as opposed to investments, which may or may not get you that rate.

[ticul]

What a nice surprise. Congratulations!!! Whatever you do, just take your time. When something big happen to us, we just take our time to try to make the right decision. You also need to take some of it just for you and your DH and go on a nice little trip or something else. It was given to you for a reason and I am sure it is because you are a good person SO ENJOY IT. Again, Congratulations................................... ...................

[Frugalbigmama]

Not to be a Debbie Downer but just remember that any inheritance put into the family pot becomes the family pot.

[macw1960]

No kids at home, I don't really want to invest it, our mortgage payments have been topped up since last year but I like the idea of checking with the bank to pay off the mortgage depending on penalties.

I also want to check into TFSA accounts for both DH and I.

I really want to think this through without rushing it as I don't want to be like a lottery winner and broke the next year.

We don't really want to travel.

Thanks for the help so far.

[jasperandchar]

@macw1960 sorry to hear about someones passing but congrats on the gift especially since it was unexpected.

I would tackle the mortgage by either paying it out outright or doing your pre-payments.

Also another great idea is the TFSA for both of you as suggested, that will be a nice cushion for retirement or savings in the long run.

Are there any renovations that would make your lives easier in the long run, having said that, do ask for references etc so that you get what you pay for. The renovations would increase your property value in the long run.

When MIL got an inheritance from her dad's passing, I called our accountant because she doesn't have one and the accountant said DO NOT ABSOLUTELY DO NOT put those funds in anything that will be taxable
ie RRSP as that is $ that you do not have to pay on your inheritance so why would you put those funds into something that you will get taxed on.

I would suggest calling your accountant because they have not gain from giving your advice, however, Banks and investment brokers have lots to gain from giving you advice.

Best of luck in your decisions.

[jasperandchar]

Not to be a Debbie Downer but just remember that any inheritance put into the family pot becomes the family pot.

Yes MIL who has been married for 42 years put her inheritance into an account with only her name. Anyways she blew the $ in less than a year and really has nothing to show for it but a tiny add to their home. And she's counting down for another year as the last of the inheritance is locked into investment and her and her siblings did not want to pay the penalty fees. Oh and she now has her central air on diferred payments as she has no $ left.

MONEY makes some people crazy or stupid. Not meaning to offend anyone on here.

[macw1960]

@macw1960 sorry to hear about someones passing but congrats on the gift especially since it was unexpected.

I would tackle the mortgage by either paying it out outright or doing your pre-payments.

Also another great idea is the TFSA for both of you as suggested, that will be a nice cushion for retirement or savings in the long run.

Are there any renovations that would make your lives easier in the long run, having said that, do ask for references etc so that you get what you pay for. The renovations would increase your property value in the long run.

When MIL got an inheritance from her dad's passing, I called our accountant because she doesn't have one and the accountant said DO NOT ABSOLUTELY DO NOT put those funds in anything that will be taxable
ie RRSP as that is $ that you do not have to pay on your inheritance so why would you put those funds into something that you will get taxed on.

I would suggest calling your accountant because they have not gain from giving your advice, however, Banks and investment brokers have lots to gain from giving you advice.

Best of luck in your decisions.

I was definitely not going with RRSP's as I was really not wanting to give the Government anymore money than they already get from us.

I wouldn't mind redoing the bathroom but not really necessary.

[macw1960]

Yes MIL who has been married for 42 years put her inheritance into an account with only her name. Anyways she blew the $ in less than a year and really has nothing to show for it but a tiny add to their home. And she's counting down for another year as the last of the inheritance is locked into investment and her and her siblings did not want to pay the penalty fees. Oh and she now has her central air on diferred payments as she has no $ left.

MONEY makes some people crazy or stupid. Not meaning to offend anyone on here.

I thought of central air but would use a CC for points or AM's first and then pay it off.

[matty's mom]

Congratulations! So much good advice has been given, but if I can add my two cents? I have been through this a few times over as I was the only child of a Mom & Dad who had me "late". It is such a blessing but also a sadness recieving money because someone died. In my process of dealing, I learned three things:
1) like others have said take your time. Even when it comes to the 15% payment. You have time.
2) Be careful mixing assests. DH has a job that can potentially put him at risk for suit. Because we are married, mine is his and his is mine. But an inheritance is a gift just to you. Be aware that if you apply it to joint assests, it becomes a joint asset.
3) Make sure that the money is legally defined/ designated for your your family. If you don't have a will- time to get one. If you have one-you may need to get it amended.

Good luck in your decision. And my sympathies to your loss.

[jasperandchar]

I thought of central air but would use a CC for points or AM's first and then pay it off.

As my grandma would say once a saver always a saver, get the most bang for your buck, using your cc for points etc definitely makes total sense to me.