An inheritance usually arrives in two parts: anything that named you as beneficiary (life insurance, an RRSP, a TFSA) comes fairly quickly and directly, while your share of the estate comes only once the executor has settled it. In between, there is time to decide what to do with the money, which many people take on purpose. This page covers when the money comes and the choices that follow. It is part of our estate planning guide; whether you owe any tax on what you receive is covered in tax on an inheritance in Canada.
How long until beneficiaries are paid?
Your share of the estate is paid only after the executor has finished the steps that must come first, so the timing depends on the estate rather than a fixed rule:
| Step | Who | What it waits on |
|---|---|---|
| Find the will and apply for probate, if needed | Executor | The court’s processing time in that province |
| Collect assets and sell any that won’t be distributed in kind | Executor | Buyers, appraisals, institutions releasing accounts |
| Pay debts and the costs of the estate | Executor | Creditors’ claims coming in |
| File the final return and the estate’s returns | Executor or accountant | The CRA’s assessments |
| Get the CRA clearance certificate | Executor | The CRA’s review |
| Distribute to beneficiaries | Executor | All of the above |
Executors often hold back most of the estate until the clearance certificate arrives, because distributing earlier can make them personally liable for unpaid tax; some make an interim distribution while keeping a reserve. Disputes, a business, foreign assets or a property that is slow to sell all add time. The executor’s side of the process is in the financial checklist when someone dies.
What reaches you directly
| Asset | How it reaches you |
|---|---|
| Life insurance naming you | Paid by the insurer once the claim is complete; not taxable |
| RRSP or RRIF naming you | Paid by the institution; a spouse can roll it over, while for anyone else the tax is generally charged to the estate on the final return |
| TFSA naming you | Paid by the institution; see what happens to a TFSA when you die |
| Joint accounts and property with right of survivorship | Yours as the surviving owner (see joint accounts after a death) |
Tax, in brief
Canada has no inheritance tax on the person who receives the money. The estate pays tax on the deceased’s final return, including on gains from the deemed disposition of their property at death; see taxes at death. Once you own inherited investments or property, your cost base is generally the value at the date of death, and future income and gains are yours to report. The details, including inherited RRSPs and property, are in tax on an inheritance. Probate fees, paid by the estate, reduce what’s left to distribute; see probate fees by province.
What to do with inherited money
Step 1: park it while you decide
A high-interest savings account or short-term GIC keeps the money safe and earning something while you work out a plan; see the best savings accounts in Canada.
Step 2: high-interest debt
Paying off credit card balances and other high-rate debt is a guaranteed return equal to the interest rate. Mortgage prepayments are limited by your mortgage’s prepayment privileges, and low-rate debt is a closer call against investing.
Step 3: registered accounts
| Account | Room for 2026 | What it offers |
|---|---|---|
| FHSA | $8,000 a year, for first-time buyers | A deduction now and a tax-free withdrawal for a first home |
| RRSP | 18% of last year’s earned income, up to $33,810, plus unused room | A deduction now; tax deferred until withdrawal |
| TFSA | $7,000 of new room, plus unused room | Tax-free growth and withdrawals |
| RESP | Contributions that attract the Canada Education Savings Grant | Government grants for a child’s education |
Step 4: invest the rest
What’s left can go into a non-registered account. How to invest a lump sum, all at once or in stages, is covered in finances after winning money, and which holdings suit which account in asset location.
Inherited property
| Option | Trade-offs |
|---|---|
| Sell it | Cash to invest; selling costs, and tax on any gain since the date of death |
| Keep and rent it | Rental income, but landlord work and tax on the rent |
| Live in it | A home, possibly sheltered by the principal residence exemption from then on |
Several heirs inheriting a property together usually need a co-ownership agreement; see joint tenancy vs tenants in common. A family cottage has its own planning issues, covered in cottage succession planning.
When people get advice
A simple cash inheritance may need no more than a plan for debt and registered accounts. Larger or more complex inheritances (property, a business, foreign assets, or amounts that change your retirement picture) are where people bring in a fee-only planner, an accountant or a lawyer; see fee-only financial advisors.
Common mistakes
| Mistake | Why it costs |
|---|---|
| Deciding everything in the first weeks | Grief and pressure from others make for rushed choices |
| Spending first | One-time purchases use up money that could have grown |
| Losing track of the cost base | Selling inherited investments later means reporting the gain from the date-of-death value |
| Mixing it with a spouse’s money without thinking about it | Inheritances are often excluded from family property on a separation only if kept separate, and money given to a spouse can attract the attribution rules |
Making or updating your own will afterwards is covered in how to make a will in Canada.
Related reading
Sources
The figures and rules on this page come from these sources, last checked against them on August 29, 2026. How we check facts.
- Canada Revenue Agency: FHSA: Participating in your FHSAs
- Canada Revenue Agency: How contributions affect your RRSP deduction limit
- Canada Revenue Agency: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE