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Falling Money

Managing a rare windfall: my grandmother’s inheritance

Last Updated on March 14, 2022 by Mr. FightToFIRE

2nd May was a day I will never forget. I married the love of my life. Eventhough this was during the Coronavirus pandemic, and we were in lockdown, resulting in not having any witnesses, we were still able to make it our own and have a day that we will remember fondly. Unfortunately, a week prior, I experienced my grandmother’s passing, something I won’t forget. Without a doubt the darkest moment in my life, but I would never have thought she would take care of me even after death.

Having to say goodbye to my grandmother was hard in these corona-times. Especially not being able to be more and closer with her as she was battling Anaplastic thyroid cancer (ATC). This type of cancer is very aggressive and, to this day, incurable. Luckily, I could be there in her last hour before she received euthanasia. I was there, just like she was always there for me.

From taking care of me when my parents were off working to sewing my first cosplay costume for my first convention, she helped me immensely.

Even posthumous, she is there for me, as on 21/05, I noticed, with great joy upon looking into my checking account, she left me a 27,913.49 EUR financial windfall.

What does a windfall (of money) mean?

A (financial) windfall, like an inheritance, is an amount of money that you unexpectedly receive on top of your regular income. It could be small but could also be a life-changing amount.

How much is a windfall?

Like most things, it depends. It’s relative to what you usually receive as income. It can be as low as 1,000 EUR for someone living on unemployment benefits or as high as 50,000 EUR for a person earning 5,000 EUR per month.

It’s clear that it’s hard to put one number on it, but let us try anyway. I will use the median household income for a single person in Europe in 2019. On average in Europe, this is 16,000 EUR. For Belgium, this is 18,160 EUR.

Based on this, it’s clear to see that it’s not farfetched to consider anything above 1000 EUR a windfall.

Inheritance tax on my windfall: an inevitable inconvenience

In a period where you are still mourning the deceased, the government comes in and adds some extra salt to the wound. This inheritance tax is and will probably always be food for debate. On the one hand, a child has no merit from where it is born and therefore no right to that inheritance. On the other hand, parents say: “I do what I want with the money I’ve earned”. These two positions will always be up for debate. For now, they are as followed.

In Belgium, the tax is 3% for those in a direct line with a reduction of the first 12,500 EUR when the max. inheritance is less than 50,000 EUR (Advies-nalatenschap, n.d.). Since this is the case for me, my inheritance tax is:

Total inheritance tax: 27913.49 x 0.03 = 837.4047

Reduction: 500 x (1 – (27.913.49/50.000)) = 220.8651

Total inheritance tax due = Total inheritance tax – Reduction = 837.4047 – 220.8651 = 616,5396 EUR

As a result, my total inheritance is thus 27,913.49 – 616.5396 = 27 296,9504 EUR.

Optimizing a windfall in Belgium

Interestingly enough, if a (grand)parent wants to avoid inheritance taxes for their (grand)kids due to the reduction construction if you receive max. 12,500 EUR, you won’t pay any inheritance tax on it as the reduction cancels out the 3%.

On top of that, further optimization is possible by placing the money as a (grand)parent in a (Belgian) “TAK21” investment insurance with a term of at least 8 years and 1 day. This is life insurance with a guaranteed return, whereby the income is free of withholding tax. As a (grand)parent, you can then designate a grandchild in the contract as the beneficiary upon death.

I presume this is what happened to me since the transaction statement mentioned the insurance branch of my grandmother’s bank, and the amount isn’t exactly a round number.

This has to be done by the (grand)parent, and it’s for a total net inheritance of 12,500. For more considerable windfall, there isn’t a way to not pay taxes at all.

Manage a windfall successfully: budgeting

~27,000 EUR is a nice windfall. It’s not life-changing but it gives some options. There are quite a few things I could do. Spend it all, for one. Though that’s not in my nature nor really what you’d expect from someone that is vying for FIRE.

The smartest thing to do with inheritance is allocating it to what will help reach my preset goal: financial independence. It should also protect me, and give me some enjoyment. It’s easy cause it’s a solid, but manageable amount. In the case of something like 100,000 or more, I’d probably let it in my account for a bit till I’m relaxed and have come to terms with what has happened.

Budgetting my grandmother's inheritance

So how will I budget this lump sum of money? I have things in mind. Let me sum them according to my priorities:

  1. Top up my Emergency fund: As I recently invested quite a bit of money that I got from a tax deduction on top of some of the money I had in a savings account, the most important thing to do first is to build up my emergency fund to a healthy condition. 12,500 EUR goes into this. Together with the 2,500 I already have, I have saved roughly 6 months of salary.
  2. Cash position for future opportunities: This one is a bit vaguer. 2,500 EUR will go into another savings account. It will be used for opportunities that might arise in 1 year or less. Things like a dip in the stock market, or something that I don’t urgently need and can wait for a sales period.
  3. Further financing my investment portfolio: This one is obvious I’d say? It’s what I consider the next best thing to do with a (modest) windfall such as inherited money. With 10K I can add quite a bit of extra to my growing portfolio.
  4. And finally, fun money: I set aside the left-over amount, 2,296.95 EUR after taxes, for a nice wellness weekend with the misses, or some new computer hardware, or maybe a household appliance.

What I didn’t do with this windfall

I didn’t set some aside for my mortgage. For one, it’s too soon since I have just started and haven’t even taken the entire loan yet. Second, at my rate, it’s more interesting to invest. I can handle the mortgage with my income so I’m not stressed having this monthly payment.

I had a wonderful surprise from my late grandmother. I will do my best to commemorate her legacy by making sure the money she left me.

What about you? If you inherited a large amount tonight, what is the first thing you do tomorrow?


I'm a developer for a major financial institution in Belgium that is present in over 40 countries. I have over 8 years of working experience in the development of customer applications focussing on all aspects of banking. This helped me gain a deep understanding of the inner workings of a commercial bank. All of this experience in both banking and life culminates in this blog about personal finance and my fight towards FIRE.

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European DGI

My sincere condolences 🙁

You made some wise money decisions. She must be proud on you!

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