r/inheritance • u/Beautiful-Log8046 • 2d ago
Location included: Questions/Need Advice Advice?
Wife and I live in Canada.
We are 31yr old and are married with a 1yr old.
We own the apartment we live in and have about 200k left in the mortgage.
She is on maternity leave. I work a couple of jobs that bring in about 150k net.
We have:
- 120k in equity in our apartment
- 135k in savings
- 235k in investments earning ~11% a year over the last 6 yrs.
We own our cars outright.
We pay about 3.5k a month in fixed costs. The rest we either use for investment, travel, helping family get ahead etc.
We are about to come into an inheritance of about 4m or a touch more. This was a bit of a shock as it wasn’t expected. When her dad passes there is another 3m coming to her.
What do we do with it? Do we try and retire? My wife wants to buy a house with a yard… probably around ~1.5-2m. Do we buy it outright or do we use the investment income to pay it down using a mortgage?
We are fairly risk-averse.
Honestly I feel very guilty about her inheritances as my family doesn’t come from much in terms of assets.
Advice?
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u/little_truble 2d ago
First, congrats, and don’t make any big moves for the first 6 to 12 months. Park the money in a high interest savings account or short term GICs and take your time, because nothing here is urgent and rushed decisions are how people regret windfalls. Before anything else, book a fee-only financial planner (not someone paid on commission) and a tax accountant, since the tax treatment depends on how the inheritance is structured and where it came from. On the guilt part, her family chose to leave it to her and it’s now your family’s security, so there’s no reason to feel bad about it. A house with a yard for a 1 year old is a totally reasonable thing to spend on. Whether you pay cash or finance part of it is a math question to run with the planner, but get the decision made on paper rather than on a feeling.
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u/Beautiful-Log8046 2d ago
Hey - thanks! Yeah, a house with a yard is / was our dream. We thought it would take 5-10 more years but that timeline has shrunk obviously. I want to ensure my wife gets to pick her dream house.
We will go find a fee only wealth planner to see how the numbers sit.
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u/Caudebec39 2d ago
You are going to be skewered in this thread for saying "We are about to come into an inheritance..." when in fact it's 100% your wife's inheritance.
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u/Beautiful-Log8046 2d ago
Oh hey - yeah I fully agree. Honestly it is my wife that has used that expression a lot recently so I guess it leaked into my brain. I apologize to anyone that I triggered.
I want to be 100% clear - it is HER inheritance. I also want to mention, as I did in the bottom of my post that I do feel quite guilty about this inheritance as I know I will get nothing from my family to balance it out. I do my best to be the best husband I can be for my family.
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u/trackpap 2d ago
Don't mind him.
The smart way to do this to me is:
Take 6 months worth of current expenses put into HYSA, everything else goes into a year CD. Max out all contributions to your jobs, social security, pension, etc...
Try to figure out if anything you want to buy is currently growing at a rate that is not normal. For example: game cards are used by Chinese and othera to move money. Hence their demand has skyrocketed.
Once you figure that out what is triggering it and can it go away. If it can, don't buy.
Whilst you are in this process, enjoy stress free life, after the year, you should already get a sense of what you desire, show your numbers to different banks and have them fight for you, you are now a star player, always demand more, if they don't give better rates walk away.
I could go on...
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u/Beautiful-Log8046 2d ago
Great reply - thank you.
We try not to use banks - just Wealth Simple. Way better rates honestly. Not a plug for WS, but just our experience.
So you’d lean towards buying a house outright?
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u/trackpap 2d ago
I don't know what state you live in, so my opinion will always be swayed by which market you are in
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u/Beautiful-Log8046 2d ago
We live in Canada.
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u/trackpap 1d ago edited 1d ago
There's 2 ways to look at this for me:
Understand cañadas situayion, starter homes and rentals will go up.
You can, either buy a 2 bedroom apt and grow from there hassle free.
Or go into a house in a nice neighborhood but buy a not so nice house, be set with cash and afford the sweeter everyday luxuries Canada has to offer.
Later if you managed to accrue more, you keep growing.
I'm sure there's more ways to look at this, but your perspectives is what matters.
I have wealth, I want a Stonehouse, I cannot afford a Stonehouse, but I can fly around the world and take on hobbies while I monitor investments, and plan for future kids in hope of getting them the best education possible and great experiences like my parents did for me. This could also be your story and if it resonated with you, you need to have a chat with your SO about it not with us.
Also, bankers should always be engaged with even when you don't need them, because when you will, they'll be ruthless.
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u/trackpap 1d ago edited 1d ago
Oh and dude, diversify, bankers are not great people, it's best to have multiple of them, you no longer have to chat with them, they are no longer fully bankers until you are at 10mil and idk in Canada. But having multiple banks know you and your spending in their system afforda you flexibility in the future.
You never know and that is what wealth buys people, options.
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u/VoicelessCalamity 2d ago
i mean yeah, legally it's hers obviously but when you're married with a kid and a shared life it's not weird to think in terms of "we"
the guilt thing is worth unpacking though, maybe a therapist for a few sessions just to sort out why you feel that way so it doesn't turn into resentment or awkwardness down the line
on the practical side buying a house outright with a chunk of it is probably the move if you're both risk averse, frees up a ton of monthly cash flow and you still have plenty left to keep invested and growing
at 4m you could easily park the rest in something boring and safe and still pull in a very comfortable income without touching the principal, maybe not full retire at 31 but definitely scale back to one job or part time while you figure out what you actually want your days to look like
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u/superfrugal1 2d ago
I would let her pick the house she loves and you like, go for a big yard. Pay the house off, try to get her to be an at home mom especially while the kids are little! Then when they go to school, if she wants to work she should, unless she’s going to be a cashier, then maybe she’s better off volunteering at the kids schools.
Do not start a business!
You should keep working while you like your job, if you like your job. Max out your TFSA, RRIF, RRSP,and group RRSP, every year. she should figure out a way to get income, so you can also max out her pension schemes as well.
I would not put any of that inheritance into the market, I would get a MYGA or bonds both are around 6%, and are going to go higher so don’t get a 5or10 year ones, 1 or 2 years for now, then when American treasury bonds go to 12%, I would take a crapload of them in $100k or $200k for 30 years. Those bonds went up to 12% once, and Wall Street has never paid 12% for 30 years straight, nor has any other investments paid that much for that long.
Travel plenty, stay with the lifestyle you have and were raised in. 2 mill for the house leaves you with 2 mil for a MYGA or bonds, that’s about $120k in income a year. Feel free to peel off a little (or a lot) of the interest to enjoy yourselves. Best of luck.
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u/Beautiful-Log8046 2d ago
I find it interesting that people would suggest my wife and I sign a post nuptial agreement. We’ve discussed this and immediately tossed it out as a stupid idea. Obviously folks have some history of partners being shitty. Tap on wood - she and I are each other’s anchor points. We are two imperfect people working together to make a perfect home for our kiddo.
To the original question of - to buy outright or to shave off investment income to pay mortgage - I assume it is only worth the risk if the investment income outpaces the mortgage amount by a fair margin?
We’d definitely rent out our current apartment.
We’ve been reading these replies and have found some very thought-provoking ideas. Thank you for that!
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u/trackpap 1d ago
Just remember one thing, nothing is ever really urgent because of that it's okay to make mistakes on the benefits, but always protect the capital.
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u/P-DubFanClub 1d ago
If the wife won't protect her own assets then OP should be doing that for her
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u/trackpap 1d ago
That's not for me to decide, they are adults, and he asked what to do, which I said and guided to the best of my ability.
Now if you want to play Superman on problems and situations which you have no history or context to, be my guest.
I went into my marriage telling my wife our assets would be separate, my capital is for our kids to get the best, the benefit of the capital would be for us to spend and grow and she accepted, later she's petty about it, but that's how it goes.
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u/P-DubFanClub 1d ago
It's not weird to suggest that she not commingle at least some of her inheritance as it's true that the money came from her family's hard work. If something terrible happened that money could easily end up outside of their family, unless your wife protects her children in some way
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u/Momsterguurl 1d ago
Right? This person isn’t even thinking with good intentions if they can’t see that.
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u/Beautiful-Log8046 18h ago
Definitely thinking of good intentions… not sure where this mindset that I’m out to get my husband/wife, or out to steal funds from our household?? I know I don’t have to explain our relationship, but I am simply shocked at the assumptions here.
My husband and I have always worked as a team through everything. Everything we make is put into one pot to use as we need in our family.
We have an airtight Will that gives everything to our kids if something happens. Nothing is being taken away from our kids.
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u/Harryhood15 1d ago
I inherited 1.5 in brokerage and 823 in inherited in IRA. Should I just let it stay on fidelity? That seems to be the easiest thing to do
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u/trackpap 1d ago
What are the numbers, what return are you getting are there any fees? If you are making 12% per month, I wouldn't even touch that, if you are making 2% a year, then I'd go into a HYSA until Stock decides that future investing is a joke of the past. GL!
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u/Momsterguurl 2d ago
Advice for your wife? Absolutely. She needs to not mingle funds and sign a post nuptial agreement protecting her assets.
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u/Beautiful-Log8046 2d ago
She doesn’t agree with this at all. What we have together we share.
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u/P-DubFanClub 1d ago
You should be putting an agreement in place to protect your children, not yourself. She's already buying you half a house, that's not nothing
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u/Momsterguurl 1d ago
If you were her spouse and altruistic, you would want the best for her and protect her families intentions. You will still benefit.
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u/otherrealm99 2d ago
As the issue of whose inheritance it is caused issues in the thread, you can always sign agreements (an after the face prenup, or put any real property in her name only)
As for what do with it... It's not what most people say is the best financial decision, but for me it was piece of mind. It's so freeing not having to worry about a mortgage. I paid off my place and invested the rest. And retired early on a lot less than 3m inheritance.