- Pay off debt
More often than not, reducing or eliminating your debt is the safest and most effective use of an inheritance. In the event that you have various debts, or various options for using your inheritance, consider prioritizing debt with the highest interest rate first – credit cards, car loans, etc. Depending on the type of debt you’re carrying and the other options available to you, you may also consider paying a smaller portion of debt off and utilizing some of your inheritance elsewhere.
- Help your children If you have children who are dependent, starting or topping up a registered education savings plan (RESP) for them is a good way to help extend your loved one’s legacy. Your children may also have extracurricular expenses you can consider tackling, such as athletics and arts. Lastly, you could consider setting up a trust for your children to benefit from in the future.
- Donate to a charity Another appropriate and thoughtful way to honour your loved one who’s passed is by donating to a cause that was important to them. Not only will you honour their name, you’ll support a good cause and receive tax benefits from making a charitable donation.
- Invest Many education professionals either do not have the option to invest through a registered retirement savings plan (RRSP), or do not consider this route at all due to exceptional pension and benefit packages. However, there are always ways to invest your way towards your dream home, vacation, or retirement – and reasons why you might like to consider investing via a tax-free savings account (TFSA) or other registered investment vehicle.
- Top up your insurance coverage As with investing, life and critical insurance may not be on your radar due to the coverage you receive through work. However, education professionals often do not receive enough life or critical illness insurance to fully cover their financial needs. If you’re considering long-term options to optimize your inheritance that will help your family if you fall ill or pass away suddenly, try our Needs Analysis calculator to determine how much additional coverage you’ll need.
Options will differ from person to person, but regardless of the options available to you, it’s most important to take pause. There can be a lot of pressure to make the right decisions in honour of your loved one who has passed – or the urge to make an inappropriate one while grieving. Instead, take time to heal and thoroughly assess your options. Park the money somewhere safe, consult your financial adviser, and weigh out options that will benefit you and your loved ones for the long term.
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