# Inheritance Coming Soon



## pianoman88491949 (Apr 4, 2018)

Hi. This is my first post here. I am 68 years old, having a government pension from work, CPP and OAS. Household income is $ 40,000. RRSP savings $ 81000. 

Two weeks ago, my Mom passed away at the age of 94. She always was frugal and, when my sister (who is the executor of the will) read it, my two brothers and I nearly fell on the floor. From my research, I see that, in Canada, the average inheritance is about $ 100,000. My Moms estate is worth 2.2 million dollars which, divided amongst the four of us is going to be quite a windfall to the tune of $ 500,000 each. My sister is a former bank manager so she knows a lot about what happens now when it comes to the red tape associated with inheriting large sums of money. She advises it could take a year to get all of Mom's financial affairs in order. I have always been smart with the small amount of money that I have, being a former accounting clerk in a government office for 30 years. 

Sure, my wife and I will travel a bit but the bulk of it isn't just going to be spent so I'm going to invest and just save the rest for older age needs such as health care, etc. I think that's a smart thing to do. One thing I wonder. With Trump doing all the crazy things he is doing, I'm certainly reluctant to touch equity markets plus the fact that I'm not looking at the long term either being the age I am. Am I right on that?

Thinking of just putting most of it into Money Market Funds, GIC's, etc. Besides my "brick and mortar" bank, I'm thinking of putting some funds into online banks like EQ Bank and Tangerine. CIBC's interest rates are crap and I would like to get a better return than 1% without having to lock my money in for too long. Am I being wise to do so? I don't really care about making money as, like most people, protect what I have. I never expected to be in such a position as this. Like winning a lottery but I'm going to be careful not to go the wrong path. Like I told my friends, they won't see me coming into the coffee shop parking lot driving a Porsche. I'm happy with my Toyota. 

I know the DJ and the TSX have been doing pretty well but I still see a lot of volatility in the stock markets, especially with the political situation south of the border. Should I stay away from it? My opinion is yes. Yours? Thanks


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## james4beach (Nov 15, 2012)

I'm sorry to hear about your loss.

I think it's good to start slow in situations like these. I suggest storing the money in extremely safe places at first, only CDIC-insured bank accounts and maybe some GICs. Then start reading as much as you can, because there are many factors to consider when deciding how to invest your money. For example everyone has different risk tolerance, wants different levels of convenience (pay someone to manage it vs manage it yourself), etc. What works for one person won't work for another person. It will take a while to formulate a plan of action.

Take a look at this other thread:
http://canadianmoneyforum.com/showt...ovice-seeking-for-long-term-investment-advice

It sounds like you're with CIBC at the moment. To start with, you could open a CIBC eAdvantage savings account. Not the best, but this is an easy step under your existing CIBC profile while you open other accounts elsewhere. Beyond that as early steps I would suggest storing some of the money in GICs, as CIBC seems to have some decent rates, e.g. 1 year at 2.0%, 5 years at 2.75%.

https://www.cibc.com/en/personal-banking/investments/gics/special-offer-gic.html

The reasons for doing this are three-fold: (1) GICs lock the money for a fixed term and it can actually be helpful to have the money locked up while you're figuring things out, (2) these rates are quite decent for a totally safe investment and (3) you can buy GICs under different CIBC issuer names, where each has $100,000 CDIC insurance. Keep in mind that only the first 100K has deposit insurance, under each issuer name. CIBC's issuer names for deposit insurance purposes are: CIBC, CIBC Mortgages Inc, CIBC Trust, so 3 x 100K = 300K is eligible for deposit insurance.

Here's an idea for a first step, upon receiving the lump sum

* 300K in eAdvantage @ 0.9% (as CIBC)
* 100K in 1 year GIC @ 2.0% (as CIBC Mortgages)
* 100K in 2.5 year GIC @ 2.5% (as CIBC Trust)

The 300K savings account exceeds the insurance limit under "CIBC" but the idea here is just to give the cash a home while you find other places to put it, such as online banks.


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## humble_pie (Jun 7, 2009)

so sorry about your loss. Your mother sounds like a great lady who raised 4 wonderful kids.

with respect to the inheritance, you appear to already have a firm base of caution, which everyone would respect & wish to see in place.

jas4beach has some excellent suggestions re GICs but i would make an exception to the suggestion of the cibc e-advantage fund yielding only .90%. This is far too low for 300k in liquid funds, when the going HISA rate is north of 2%.

perhaps you could check out tangerine. This online bank has recently gone through a spate of low rates to existing clients but may have recovered; a very recent post in this forum says the poster was offered a 2.75% rate for a new HISA account.

tangerine will have an advantage in that it is big, experienced, owned by a canadian chartered bank (scotia), is easy & reliable to deal with, has a call centre that's open 24/7 for folks who can't figure out its new-design website (evidently the citrus has received plenty complaints about the new website so improving it is probably a high priority right now.)

alternatively, if you are currently a cibc client, you might want to check out HISA rates at their online banking subsidiary Simplii. It's also owned by a canadian chartered bank, which i find appealing after the meltdown in Home capital. Their rates for new accounts "should" be in the 2% range right now, or north of this.

best wishes. Hope you will stay in touch.

.


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## hboy54 (Sep 16, 2016)

Hi 

Your lack of investing experience and seemingly fearful of the stock market nature point you to all fixed income, however with ~ 20 years life expectancy, your analysis is in incorrect, there is "long term" here and in general there should be an equity component.

hboy54


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## Oldroe (Sep 18, 2009)

From your post you said 81 k in rrsps. This is a knowledge red flag. I assume you don't really know what it's invested in or much about investing. So go the GIC route.

Stock takes many hours of study and it likely doesn't interest you.


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## jargey3000 (Jan 25, 2011)

yes, oldroe...that was a question i had: what is the OP's (that stands for "Original Poster" pianoman, not "Old Person"  ) RRSP invested in?
You might want to check out the CIBC Personal Portfolio Services "managed investment solutions" with different ranges of asset allocations, depending on your needs & risk tolerance. Just a suggestion. These services will be pooh-poohed by most of the DIY-ers here in the forum, but they do offer an option for some people.


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## RBull (Jan 20, 2013)

Hi pianoman,

Sorry to read about your loss.

It might be helpful for others to see the valuable input you've already had here:

http://www.financialwisdomforum.org/forum/viewtopic.php?f=35&t=120957


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## off.by.10 (Mar 16, 2014)

hboy54 said:


> however with ~ 20 years life expectancy, your analysis is in incorrect, there is "long term" here and in general there should be an equity component.


I'm not sure I agree with that entirely. He might still live 20-30 years, sure, but at 68 he is nearing the age where healthcare costs start to pile up for some people. It's entirely possible that a few years from now, having access to the money could make a significant difference in the quality of care either he or his wife will get. Of course, it's also entirely possible that they'll be both still traveling around the world ;-)

Oh and I'm surprised it has not been said yet: if you don't have one already, both of you should open a TFSA and fill it up to the limit. It's a good place to hold the GICs.


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## Plugging Along (Jan 3, 2011)

I am sorry to hear about your lost. 

Another thought is do you have grandchildren or children? If you don’t think you will need or use all the. Only being fairly frugal already, you could set a little something that will be a legacy to your mother. 

An education account or informal in trust account for the grandchildren would set them up when they are much older.


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## Userkare (Nov 17, 2014)

Sorry to hear about your loss. My parents died some years ago ( 2001, 2004 ). It's something that you know is inevitable, but still are never really ready for.

At age 68 as well, I have long ago given up on any investments except fixed-rate HISA and GICs. I was never very good at having my money work for me. I had mutual funds that yielded less than parallel fixed-rate investments. When I did directly invest in stocks, I lost over $30K. Many people do well with the markets, but for some of us, the whole investment thing is a mystery wrapped in a con. These financial worries kept me awake at night; but now I watch the markets go up and down and it doesn't affect me as it did then.

On the other hand, rather than my money working for me, I have had more success at working for my money in a relatively high paying professional career. I have no company pensions, just CPP/OAS that I delayed receiving for 3 years, and have also managed to save a considerable sum for retirement. I'm now drawing on RRSPs/RRIFs to supplement the CPP/OAS income up to the top of the lowest tax bracket. If we need to spend money, we use non-registered savings.

We also are soon receiving an inheritance. What we plan to do, after gifting some to the kids, is to spread it out across several banks that offer higher interest rates ( EQ, Alterna, Oaken), yet stay below the CDIC limits in each. I don't know if you have considered that perhaps, in your jurisdiction, any inheritance you receive is yours alone - not part of marital assets. My wife and I decided to share any inheritances, so that we are able to open multiple accounts ( individual & joint ) and can take advantage of 3 times the CDIC coverage.

Finally, just do what you're comfortable with. Good luck.


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## kcowan (Jul 1, 2010)

Hello again pianoman
I did not respond to your prior inquiry at FWF but I will give you this as food for thought. If you are comfortable investing in GICs with CIBC, why not hold CIBC stock? Total return for bank stocks has averaged over 12% over ten years. Put the money away and forget about it. You don't need it because you having been living just fine. After 5 years, start enjoying the benefits of your "bravery" by spending some of those premium returns.

And don't believe people who say you are approaching your golden years. They are all responding to theories. Take it from someone who is ahead of you. You will have total flexibility and the wherewithal to enjoy it. Don't pass up the chance! Fear is your enemy. Go for it!


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## like_to_retire (Oct 9, 2016)

I don't see much reason not to put half the amount in GIC's, and half the amount in dividend stocks.

Easy to invest in high quality Canadian dividend stocks (banks, utilities, telcos) and receive 3.5%-4.0% dividends that grow every year and offer a generous tax advantage over interest income. Since you are already supporting yourself nicely, you won't have to sell any shares to produce income, so you aren't really concerned about the market ups and downs.

For the GIC's I would suggest purchasing them through the discount brokerage arm of your CIBC bank. You'll also use the discount broker to purchase your stocks. GIC's through the CIBC brokerage will offer higher rates and better diversity.

Stay away from advisers. You don't need to be funding their retirement.

ltr


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## james4beach (Nov 15, 2012)

When I mentioned eAdvantage, I only meant temporarily. Definitely look at the higher interest savings accounts: Tangerine, Outlook Financial, Simplii etc.

Absolutely get the promotional rates they are offering for new clients and new deposits.


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## AltaRed (Jun 8, 2009)

jargey3000 said:


> yes, oldroe...that was a question i had: what is the OP's (that stands for "Original Poster" pianoman, not "Old Person"  ) RRSP invested in?
> You might want to check out the CIBC Personal Portfolio Services "managed investment solutions" with different ranges of asset allocations, depending on your needs & risk tolerance. Just a suggestion. These services will be pooh-poohed by most of the DIY-ers here in the forum, but they do offer an option for some people.


I wouldn't touch those managed portfolio solutions due to the high MERs/management fees... with any bank but it would provide some exposure to equity markets for the longer term of 10-20 years. My bro is in a similar thing with RBC and I think he is in the Conservative one... and thus fees eat up a large part of the return.

The OP is risk averse (note his comments on TSX and DJI) so he is likely best suited for high rate HIISA accounts and a 5 year GIC ladder amongst the likes of Simplii (CIBC), EQ (but not above CDIC limits) and Tangerine (Scotia), and even CIBC. I wouldn't do that myself with perhaps a 20 year horizon but this is not about me. I already posted my thoughts in the similar thread at FWF.


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## jargey3000 (Jan 25, 2011)

told ya so...


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## humble_pie (Jun 7, 2009)

jargey3000 said:


> told ya so...



we are all agreed, though, that his sister the bank manager is doing a bangup job as executor, moving things along quickly & efficiently, are we not?

i believe it was altaRed who said the OP's sister should have good suggestions as to how to deploy the inheritance funds. This is true.

.


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## Mechanic (Oct 29, 2013)

EQ bank is paying 2.3% just for their HISA. OP and wife could put 100k in each. They also offer GIC's with better rates and shorter terms if interested. If you want lower risk investments I would do the HISA's and maybe even consider buying some bank stock. I have a chunk of BNS that pays about 4% which is a lot better than they give me for my savings account there.


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## christinad (Apr 30, 2013)

All I can say is that if revenue canada is involved expect it to take longer then a year to get all the money. Its been 3 years and we are still waiting for some money that revenue canada owes us. They are terrible.

Overall, I think a year to get the money is a short estimate. I'm pretty sure it took longer.


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## AltaRed (Jun 8, 2009)

christinad said:


> All I can say is that if revenue canada is involved expect it to take longer then a year to get all the money. Its been 3 years and we are still waiting for some money that revenue canada owes us. They are terrible.
> 
> Overall, I think a year to get the money is a short estimate. I'm pretty sure it took longer.


Depends on complications and whether there are capital loss carrybacks from, for example, a T3 Trust Return to the Final T1 Return. It only took us from April 2016 (filing of Final T1 and T3 Trust) to about October 2017 to get a CRA refund for a capital loss carryback. The NOA from the T3 Trust return was about one year from date of submission.


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## christinad (Apr 30, 2013)

Yes, the hold up is to do with a capital loss. I'm not entirely sure why it is taking so long.


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## AltaRed (Jun 8, 2009)

christinad said:


> Yes, the hold up is to do with a capital loss. I'm not entirely sure why it is taking so long.


It goes back to the bottom of the pile, e.g. it is a re-assessment of the Final T1, so it is shuffled back to the beginning of the line. A CRA agent told me that at least once when I complained this was a no-brainer one line adjustment.


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## latebuyer (Nov 15, 2015)

Thanks for the explanation. It would be nice for there to be closure but i have a feeling this won't be resolved until after tax season.


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## kelaa (Apr 5, 2016)

I would think 2 million dollars are not mostly cash, or cash equivalents, or primary residence. If it were 1/4's RRSP for instance, and 1/2 taxable accounts with cost basis going back 20 years, the tax hit can be huge. So your 1/4 of the pie might be more like 1/7th. I would think it is a pity to let 200 - 400 k rot in a GIC for a pitiful 1.5 - 2.5 % of interest income. I would think dividend stocks and preferred shares to enjoy immediate cash flow would be a better play. Bank the extra cash flow, invest it, buy extra insurance, spend it, whatever.


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## sags (May 15, 2010)

I don't know if it is the case here, but almost all of these "getting millions of dollars" posts turn out to be fake.


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## pianoman88491949 (Apr 4, 2018)

*Fake News????*



sags said:


> I don't know if it is the case here, but almost all of these "getting millions of dollars" posts turn out to be fake.


My inheriting a half a million dollars isn't fake news. Go to Trump about that.:tennis::tennis:


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## Eclectic12 (Oct 20, 2010)

My condolences on your loss.

Since you mention that this seems to be the will where time is needed to "get all of Mom's financial affairs in order" - then I fear the "windfall to the tune of $ 500,000" is misleading you. There is the final tax return to file which may hack into the $500K dramatically.

From what work I have done as well as discussions in my family by executors - the red tape as well as the delays is getting the affairs in order, dealing with each institutions requirements, filing the final tax return, paying the income taxes, getting the approval to pay a safe amount of the inheritance out etc., not the size of the inheritance


Bottom line is that unless the $2.2 million is an after-tax figure (does not seem likely) or big chunks of the $$ are in tax free forms such as a TFSA or insurance policy payouts to the yourself/siblings - it is likely to be a much smaller amount. I expect it will still be substantial but depending on the mix of what it is, the income tax alone - before estate expenses or executors fees etc. may be substantial.


Cheers


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## coptzr (Jan 18, 2013)

http://www.scotiabank.com/ca/en/0,,11823,00.html#disclaimer


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