Receiving an inheritance can bring mixed emotions. It may provide new financial possibilities, though it usually arrives while you are grieving someone important to you. That combination can make deciding what to do with the money more complicated than it first appears.
Meanwhile, inheritances are becoming increasingly significant for Canadians. Statistics Canada reports that with 61% of Canada's net wealth being held by people aged 55 and older, significant amounts of wealth are expected to move between generations in the years ahead. Whether your inheritance is $10,000 or $1 million, a thoughtful approach can help you make the most of what you've received.
Grief, competing priorities and unfamiliar financial decisions can make it difficult to know what to do. You may have encountered the claim that 70% of inheritances are gone by the next generation. The actual research is a little different - and more interesting.
Research commonly attributed to The Williams Group looked at more than 3,000 affluent families and found that approximately 70% failed to successfully preserve family wealth through the second generation[i]. Importantly, this isn't the same as saying 70% of individual Canadians spend their inheritance. The research looked at the broader transfer of family wealth, including businesses and other assets, and identified issues such as poor communication, insufficient preparation of heirs, mismanagement, poor investments, spending, and family disagreements.
There is also evidence that receiving unexpected money changes how we spend. A 2025 study using household data found that inheritances were associated with an immediate increase in spending on durable goods, with a stronger response among households facing financial constraints[ii]. Bank of Canada research similarly notes that households may spend a significant portion of unexpected income, although people tend to spend a smaller proportion when the income is larger[iii].
There are understandable reasons for this. An inheritance can feel different from money we've earned and saved ourselves. We may also be making decisions while grieving. Paying off a mortgage, helping children, renovating a home, travelling, or buying a new vehicle can all seem reasonable individually. Without a plan, however, several reasonable decisions can quickly add up.
So, what should you do instead?
Unless there's an urgent financial need, you don't have to decide immediately. Consider placing cash somewhere secure while you take time to understand what you've inherited and think about your priorities. Particularly following the death of someone close to you, postponing major purchases or irreversible financial decisions can give you space to make choices with a clearer perspective.
An inheritance isn't always a cheque. You might receive cash, investments, real estate, registered accounts, or other assets, and each can come with different considerations.
Canada generally doesn't impose an inheritance tax on beneficiaries simply because they've received an inheritance. However, that doesn't mean tax considerations disappear. The deceased person's estate may owe income tax, including tax resulting from the deemed disposition of certain property immediately before death. Different rules may also apply to assets such as RRSPs and RRIFs, depending on the circumstances.
Before making decisions, make sure you understand what you own, its value, and any potential tax implications. For a complicated estate, professional tax or legal advice is worthwhile.
An inheritance shouldn't be considered in isolation. Take stock of your income, expenses, debt, savings, investments, retirement plans, and upcoming financial needs. Then consider where your inheritance could make the greatest difference.
For example, paying off high-interest debt could provide an immediate financial benefit. The Financial Consumer Agency of Canada (FCAC) recommends considering higher-interest debt first because reducing the interest you pay can save money over the long term.
You may also want to establish or strengthen an emergency fund. FCAC generally recommends having enough emergency savings to cover three to six months of living expenses.
Once you've taken care of immediate priorities, consider what you'd like this money to accomplish.
Perhaps it could strengthen your retirement savings, help you become mortgage-free sooner, contribute to a child's education, or allow you to help someone you care about. You may also want to set aside a portion for something enjoyable. Thoughtful financial stewardship doesn't necessarily mean saving every dollar. The important thing is deciding intentionally how much you can comfortably spend today while protecting what you want the money to accomplish tomorrow.
An inheritance is more than a financial transaction. It can also represent a lifetime of someone's work, saving, generosity, and choices.
Consider what mattered to the person who left the inheritance to you, and what matters to you.
For some people, that might mean setting aside part of an inheritance to support children or grandchildren. For others, it might mean giving to their church, a charity, or a community organization that reflects their values.
There isn't one right answer. The goal is to make choices that connect your financial resources with the life and community you want to help build.
A substantial inheritance can change your financial situation enough that strategies that made sense before may need to be reconsidered.
A financial professional can help you look at your inheritance alongside your existing savings, investments, debts, tax situation, and longer-term goals. Depending on what you've inherited, an accountant, financial planner, or lawyer may be helpful.
Receiving an inheritance is also a good reminder to think about your own plans.
Your financial circumstances may have changed considerably. Consider reviewing your will, powers of attorney, and beneficiary designations, along with your plans for giving and passing assets to the people and organizations you care about. After all, good stewardship isn't only about what we receive. It's also about what we do with it and what we eventually pass along.
An inheritance can carry both financial significance and personal meaning. You don't need to decide what to do with it all at once and you don't need to separate those decisions from the loss that brought the inheritance to you.
Give yourself time to grieve and adjust. When you're ready, consider your needs, goals and values, and what you want the resources you've received to make possible - for you, the people you care about and your community.
Thoughtful stewardship isn't about making the "perfect" decision. It's about making choices that feel considered and meaningful in your circumstances.
If you've received an inheritance, Kindred's Wealth and Investment team is here when you're ready to talk. We can help you understand your options and make financial decisions that reflect your goals and values.
[i] Williams, Roy O., and Vic Preisser. Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values. San Francisco: Robert D. Reed Publishers, 2003
[ii] Belloc, Ignacio, José Alberto Molina, and Jorge Velilla. (2025). “Consumption responses to inheritances: The role of durable goods.” Journal of Macroeconomics, 83, 103661. DOI: 10.1016/j.jmacro.2024.103661.
[iii] Boutros, Michael. (2022). “Windfall Income Shocks with Finite Planning Horizons.” Bank of Canada Staff Working Paper 2022-40.