# Inheritance... now what?



## Cookie crumbs (Nov 10, 2011)

Good afternoon 
I haven't been on this forum in a while.
2016 was a painful year. Lost both my parents, Dad in January and Mom in August.
My parents were ardent "penny pinchers" and fortunate for myself and my brother, we received a substantial inheritance.
However with this windfall comes the "expectations". My common-law husband is a business owner. He has not actively worked in the last few years due to a nasty custody battle with this ex... ongoing since 2008! Then he started a new business with a partner and unfortunately that fell apart when partner was caught doing work behind his back. His finances are very unstable at the moment. He has $ from a business he sold but that is dwindling down and he is unsure if he wants to start up a new business or restart the one he had.
All this to say. He needs financial help... behind in his taxes and to help fund start up of business (if that's what he decides to do). 
My dilemma... I'm in a committed relationship of 7 years. However I'm 4 years away from my retirement. I want to help, but how do I protect myself financially.
Has anyone gone through this... looking for any advice to help guide me. My head and my heart are not collaborating :|


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## Yeswecan (Jul 25, 2014)

Any inheritance is yours and your H can not lay claim to any of it. Even in a common-law situation as well as full on marriage. Inheritance is not common marriage property. It belongs to the person named as the recipient. 

Concerning yet another failed business venture of your H. Do not finance the next failed venture. Your H needs to find a regular job.


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## meson (May 19, 2011)

Yeswecan said:


> Any inheritance is yours and your H can not lay claim to any of it. Even in a common-law situation as well as full on marriage. Inheritance is not common marriage property. It belongs to the person named as the recipient.
> 
> Concerning yet another failed business venture of your H. Do not finance the next failed venture. Your H needs to find a regular job.


True as longs as the funds are not comingled. Keep them in a separate account. At least in the US. I can't speak to Canada.


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## Yeswecan (Jul 25, 2014)

meson said:


> True as longs as the funds are not comingled. Keep them in a separate account. At least in the US. I can't speak to Canada.


Correct. Dumping cash in the joint account makes the money available for H. Invest what monies you have if these are not already in some kind of investment that your folks had set up and will be transfered to you. 
Sorry about your loss.


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## Taxman (Dec 21, 2016)

Cookie Crumbs, I am sorry for your loss. Speaking strictly as an accountant, you are four years away from retirement, you do not say what if anything you have put toward retirement, but in four years, your bequest should start yielding some returns, which will to some extent make your retirement somewhat more comfortable, dependent on the size of the bequest. 

OTOH your significant other is financially irresponsible. The Canada Pension Plan and Old Age Security are spits in the bucket. If you contributed throughout your entire life, you could make as much as $20K. Whoopie.

He is behind in his taxes, and since he is a resident in my country, the CRA will have him on their radar. I suggest that you maintain separate finances and if possible a separate residence so that the tax authorities do not suddenly deem you a common law spouse, and attempt collection from you. Remember that common law marriage under Canadian law means living together under the same roof for longer than 12 continuous months. Same goes for having a child between the two of you, then if you live together, FOR ANY TIME, you may be deemed common law spouses.

You would be better off severing any official ties to him until he improves his situation. Talk to any accountant or financial planner and you will get the same advice. Your heart may want to, but I want to impress this on your head: You are not helping him by financing him. He must dig himself out, and not drag you down with him.

I have a client in the exact situation as your SO. He is so far behind that filing now would almost certainly bankrupt him. So, in his mid 70's he is still getting behind the wheel of his crap-bucket car and driving courier six days a week


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## Married but Happy (Aug 13, 2013)

Unless you want to help him out, don't. If you do, ask for a share of the business, so that if he succeeds, you'll get a percentage of the net each year, or a share when he sells. If you don't think his business acumen is good enough, don't invest - you will avoid a loss. Or, you can require participation and have a say in how the money is used, and not just get a return if it goes well - at least then you'd have some responsibility for the results.

However, it sounds like his decisions are not necessarily good, so I would be very cautious when lending or investing with him. FIRST, make sure you have YOUR retirement fully secured. If you need ALL of this inheritance invested for your own security, do that. Only if you have extra should you even consider risking it on him. Besides, if you stay together, he will benefit from your foresight and caution, even if he doesn't do so directly now.


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## uhtred (Jun 22, 2016)

The money yours. 

That said, having a big difference in money in a marriage can lead to all sorts of problems. When my wife inherited some money a couple of years ago, she kept it separate, but takes money out to fund things for both of us. She doesn't view it as her personal money to spend on what she wants. .


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## Yeswecan (Jul 25, 2014)

Married but Happy said:


> Besides, if you stay together, he will benefit from your foresight and caution, even if he doesn't do so directly now.


Exactly.


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## EleGirl (Dec 3, 2011)

From what I've read, in Canada, your inheritance is your money. He has no claim to it. Just make sure to keep it separate from any money you earn from other sources, like your job. If you have already put it in an account that mixes it with your any money from any other source, move it out right now. You will have the 'paper' trail to prove that it was your inheritance.

Why did he not work while in a custody battle since 2008? This makes no sense. People just do not quit working. Was he trying to avoid paying child support?

So far it seems that he as shown very poor business sense. How many business has he had? And they all failed? Why did they fail, besides the partner doing work behind his back? If he could not make it work for the last 9 years, how is he going to make it work now?

What line of work was the business in? Is the market really out there for it? 

What percentage of your inheritance does he want for this business?

I would be very leery of loaning, or giving, money to someone who has not worked for 9 years and who has failed at his businesses. This it like throwing money down the drain. He had the business and he had savings. He could have been growing the business all along. And now suddenly he needs your money for this business that he has not worked for 9 years? To me it looks like he is just greedy and wants your money.

Who has been supporting the two of you all this time? It sounds like you work. Are you the one who is supporting the two of you? What percentage of your monthly bills has he been paying for the last 9 years?

I'm answering this with the assumption that the amount of money that he wants from you is very significant, not something like $2,000. Or at least a very significant portion of your inheritance.

What experience do you have in the type of business he wants to start/re-start? Because you are going to have to be involved in the business. Could you run this business without him?

Now, how to protect yourself. The best way is to not give him any money at all. He will most likely lose it all based on his history.

If you are going to fall for this, then you have to protect yourself. You need to see a lawyer who can write up a legally binding agreement. You can give him a loan, or you can set it up so that you own 51% of the business and you are investing the money in the business.

Personally, I would no do it as a loan because he will never have to pay it back. All he would have to do is claim that he does not have the money to pay it back. 

Find out the minimal amount that he needs. Verify that this is accurate. You might need an accountant and a lawyer to help you figure this out unless you are good with numbers and running businesses. Invest as little as is possible. He can grow his own business out of earned income. Let the business grow itself.

You need to own 51% of the business. So the business needs to be incorporated. That way you have a say over the way your money is being used. 

If he wants to own the business 100%, he can earn enough money to buy you out.

You need to oversee the accounting and book keeping so that you know day to day what is going on. You need to make sure that he is not doing work behind your back; that he is not just skimming money off the top for himself; that all taxes, fees, etc. are paid; that he does not make any debt that you would be responsible for. Make it so that two signatures are required for any debt.

And you need to be able to fire him if you find out that he is running the business into the ground or just skimming off money for his own use. And once you fire him, you would need to either close the business or hire people to replace him.

Could your relationship survived this arrangement? Few could. 

I would never invest in a business, or loan money, to someone who has not worked for 9 years and who has at least 2 business failures. There is a reason why he cannot get a loan from some place like a bank to restart his business. He's not a good credit risk. You should not be playing bank when you have no experience in this at all.

I could be wrong, but my impression is that you also do not have the experience or desire to run his company to make sure he does not blow your money.

Don't let him pressure you into something that you do not really want to do. If you refusing to hand your inheritance over to him is going to end your relationship because he became angry at you, then the relationship is a very bad relationship and you need to get out of it anyway.

You are going to need that money in retirement. If you let him blow it, your life after retirement is going to be much less comfortable.


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## wilson (Nov 5, 2012)

Do not, under any circumstances, invest in the business. If you want to give him money and never see it again, then give him money. But it's clear in your post that it's difficult for you evaluate the feasibility of investing in a business and expecting a return. This means you'd have to rely on advice of other people, but then how do you know who to trust? 

The most likely outcome is that you give him money, he tries to run the business, and it fails after a certain amount of time. The only thing your money does is allow him to run the business longer before it closes. Yes, there's always the chance the business is successful, but that's a very small chance based on his history. So the most likely outcome is that he burns through the money and you don't get anything back.


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## Taxman (Dec 21, 2016)

It is always against my principles to throw good money after bad. In this case, he shut down his business to avoid an entanglement. Not good business sense. He should have incorporated around the business, saved himself a ton of tax as small business in this province pay 15.5% small business rate. Instead the business as a proprietorship answers to the same tax as himself, and is attackable by ex spouses or for that matter the courts.

The enhanced retirement would benefit him as well as OP, given that they are in a 7 year committed relationship. As far as his taxes are concerned, I would bring him in under a voluntary disclosures programme with the CRA. There, with the aid of an attorney, we could negotiate a payment plan that would keep him going. He must address his tax problem before even considering opening or reopening a business.


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## Cookie crumbs (Nov 10, 2011)

Thanks for all the replies. 
To clarify... he was separated in 2005. Business was doing very well (industrial construction contractor). Due to his ex's relentless attempts to alienate his children, which intensified in 2008, he had to take on less projects. In 2010 in took a partner in the hopes this would provide him and the business the support needed while he "battled" in court with his ex. He spent a crazy amount of $ to not loose his children. However in 2012 he discovered his partner was taking work behind his back (found out partner wanted his numerous contacts). He stopped taking new contracts. Focused stayed on getting his boys back and in 2014 he had shared custody and finalized his divorce. Then the battle with his ex-partner began. Ex-partner was not happy that he stopped the work and dragged him to court. Seeing closure to this hopefully this summer.
I have to reiterate, he was very successful up until he had to fight to not loose his boys. Lawyer did say most fathers have to, unfortunately step away at some point in this type of battle, since they can no longer afford it. He had another stand alone business that he sold and has been living off that revenue. I have not been supporting him.
I moved in 2 years ago. Pay my share of the expenses.
Sorry, should have been more detailed in my original post. 
At this time he is considering either taking on projects again or finding employment with another employer.
My concern is how to assist him and protect myself.
Through the many responses I did receive some good advice... thank you


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## Yeswecan (Jul 25, 2014)

You can assist and protect by being supportive. Support does not need to be monetarily either. You take that inheritance and think of your future 4 years from now when you hang up your spurs for retirement. Understand your financial retirement independence is also a benefit for him.


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## She'sStillGotIt (Jul 30, 2016)

Cookie crumbs said:


> I moved in 2 years ago. Pay my share of the expenses.
> Sorry, should have been more detailed in my original post.
> At this time he is considering either taking on projects again or finding employment with another employer.
> My concern is how to assist him and protect myself.
> Through the many responses I did receive some good advice... thank you


Honestly? It sounds as though one of the biggest reasons he had you move in was for the financial help.

Sorry, but he's not your husband so it's not *your* future you'd be investing in. He's a grown ass man whose made ignorant business decisions and HE needs to clean his own mess up, not take advantage of the gift your parents worked their asses off to give YOU.

Not your circus, not your monkeys.


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## DustyDog (Jul 12, 2016)

Cookie crumbs said:


> Good afternoon
> I haven't been on this forum in a while.
> 2016 was a painful year. Lost both my parents, Dad in January and Mom in August.
> My parents were ardent "penny pinchers" and fortunate for myself and my brother, we received a substantial inheritance.
> ...


Do nothing at all!

Seriously.

Your husband, surely, did not plan on your parents dying when they did and has not planned this inheritance. I am immediately skeptical of a businessman who depends on a atroke of luck to bail himself out of a problem. I would also point out that husband, as darling as he may be in other ways, has now TWICE chosen a partner who wasn't right for him - one marital and one business. If I were a bank, I would pass on letting him have any money until he has demonstrated a better ability to choose partners.

I would also note that he should not have a personal tax problem! There are easy and not very expensive ways to incorporate a business, and thereby protect your personal income and taxes from business problems. If he had a partner and the business was not incorporated, then he would be found legally liable if it turned out that partner was intentionally violating laws to make the books look better or any of a number of other things. One should never have a business partner except if protected by incorporation.

What you should want to do with your money is find a low-risk method of making it grow. Your husband, so far, has not shown himself to be low-risk for business.


The other reason to "do nothing" is this: Even if he wasn't at issue...once you have an inheritance you really want to speak with a lot of retirement advisors, sleep on their advice, go back and ask questions - and make no decisions at all for a year or more. You also were not planning on having this, and probably have not determined whether to invest broadly, find an investment manager, etc, right? Then no sudden moves.

By the way, husband should read everything he can on bootstrapping a business. That's where you make an investment no larger than pocket change to get it started. Buy a lawnmower and a $5000 used pickup truck and put ads on Craigslist for lawn services. Make enough $$ to buy a second truck and mower and hire someone else. And so on. All businesses can be bootstrapped. I was once part of a $500 million touring production company that began by renting $200 sound systems to coffee shops....total investment from founder was $500.

Hope this helps.


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## DustyDog (Jul 12, 2016)

Cookie crumbs said:


> Thanks for all the replies.
> To clarify... he was separated in 2005. Business was doing very well (industrial construction contractor). Due to his ex's relentless attempts to alienate his children, which intensified in 2008, he had to take on less projects. In 2010 in took a partner in the hopes this would provide him and the business the support needed while he "battled" in court with his ex. He spent a crazy amount of $ to not loose his children. However in 2012 he discovered his partner was taking work behind his back (found out partner wanted his numerous contacts). He stopped taking new contracts. Focused stayed on getting his boys back and in 2014 he had shared custody and finalized his divorce. Then the battle with his ex-partner began. Ex-partner was not happy that he stopped the work and dragged him to court. Seeing closure to this hopefully this summer.
> I have to reiterate, he was very successful up until he had to fight to not loose his boys. Lawyer did say most fathers have to, unfortunately step away at some point in this type of battle, since they can no longer afford it. He had another stand alone business that he sold and has been living off that revenue. I have not been supporting him.
> I moved in 2 years ago. Pay my share of the expenses.
> ...


Based on this, your only protection is to not co-mingle money. Do not get married. Do not sign both your names on any contract, be it a car purchase, land, etc.

This may go against his ethics, but if you earn enough to support both of you, does he qualify to file bankruptcy? Your money could be kept out of it. Bankruptcy is for extreme cases - I'd say a wealthy and vindictive ex plus a cheating business partner constitutes an extreme case.


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