Received an Inheritance in Ontario? Here's What to Do Next

Receiving an inheritance is rarely straightforward. It arrives alongside grief, family dynamics, and often a level of financial complexity most people aren't prepared for. The dollars can be significant — sometimes life-changing — and the decisions you make in the months following can have long-lasting consequences.

The most important thing to understand is this: you don't have to act immediately. In fact, resisting the pressure to act immediately is often the most valuable first step.

The First 60 to 90 Days: Slow Down

There's a predictable pattern that financial planners see after clients receive a windfall. Well-meaning people in their lives offer advice. Family members may have expectations. Financial product salespeople sometimes appear quickly. And there's an internal pressure to "do something" with the money so it doesn't just sit there.

Most of that pressure is worth ignoring in the short term.

Putting inherited funds in a high-interest savings account or GIC for 60 to 90 days while you get organized is not a mistake. It's a sound approach. The cost of a few months of lower returns is trivial compared to the cost of a rushed decision you later regret.

During this period, your goal is to get clear — on what you've received, the tax and legal context, and what you actually want this money to do for you.

Understanding the Tax Implications

In Ontario and across Canada, there is no "inheritance tax" in the traditional sense. Beneficiaries generally do not pay tax on money they receive through an estate. However, this doesn't mean the windfall is entirely tax-neutral.

The estate itself may have paid taxes before distribution — particularly on capital gains from the deemed disposition of assets at death. RRSP and RRIF balances are taxable income to the estate unless rolled over to a qualifying spouse or dependent.

If you inherit a non-registered investment account, you inherit the assets at their adjusted cost base as at the date of death — and any future growth from that point will be taxable to you when you sell.

If the inheritance includes real estate, the tax treatment depends on whether it was a principal residence, rental property, or cottage — each has different implications.

These aren't reasons to panic. They're reasons to understand what you've received before making decisions about it. A conversation with both a financial planner and an accountant is worthwhile here, especially for larger or complex estates.

Integrating the Windfall Into Your Existing Plan

An inheritance isn't a standalone event — it lands inside your existing financial situation and interacts with everything already there.

Some key questions to work through:

Does this change your retirement timeline? A significant inheritance may allow you to retire earlier than planned, or to retire with meaningfully more security. It may also change how you're thinking about drawing down your RRSP versus other assets.

Where does it go? The right account depends on your existing room and your tax situation. TFSA room can absorb some. Non-registered accounts work for the rest, with appropriate investment structure. RRSP contributions may or may not make sense depending on your income and timeline.

Does your insurance coverage need updating? A larger estate may create different estate planning considerations — including whether life insurance is still needed in its current form, or whether additional estate planning is warranted.

Does your will and estate plan need revisiting? Receiving a large asset often prompts people to think more carefully about their own estate plan for the first time. It's a good instinct.

What Not to Do

A few common mistakes are worth naming directly:

• Making large gifts to family or friends immediately: Generosity is admirable, but giving away significant amounts before understanding your own financial picture can backfire.
• Paying off the mortgage reflexively: Sometimes this makes sense. Sometimes deploying capital elsewhere is more advantageous. It depends on your interest rate, your tax situation, and your cash flow needs.
• Investing everything at once without a plan: Dollar-cost averaging into markets over time can reduce timing risk, but this too depends on your specific situation and timeline.
• Letting it sit in a chequing account for years: The other extreme — paralysis — has its own costs. At some point, the money needs to be working for you.

Marc Pineault is a financial planner at Pineault Wealth Management in London, Ontario. Marc works with clients across Southwestern Ontario who are navigating major financial transitions — including inheritances — and helps them integrate windfalls into a coordinated, forward-looking plan.

If you've recently received an inheritance and aren't sure what the right next steps are, reach out to Marc for a thoughtful, no-pressure conversation.

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.