I lost my dad back at the end of March, and it turns out he left a $125000 Canadian life insurance policy for my mum.

She was talking to the insurance company today, and when they pay out, they said they could do so either by cheque to my mum here in the UK, or into her remaining Canadian bank account – from which she could draw funds when needed.

She has asked me, in light of fluctuating exchange rates between the dollar and the pound, which I thought would be most financially prudent.

Considering withdrawals from a Canadian account always incur fees, thereby depleting funds more quickly, but that the Canadian dollar is up and down against the pound like a yoyo, what would you advise?

I’d advise that you go and see a good independent IFA, who would be far more likely to give you sound financial advice regarding this. I’m only good for getting drunk and talking about bikes I’m afraid.

Try here https://www.unbiased.co.uk/

If it is up just now, get a cheque and withdraw all the funds…and then invest it in something that can be used to draw funds as and when needed in the UK…saves any additional charges being incurred.

Definitely don’t withdraw it and spend it, use it for sensible stuff like future withdrawals as and when.

Looking at the 5y exchange rate chart: http://www.xe.com/currencycharts/?from=GBP&to=CAD&view=5Y

The Canadian dollar has been depreciating a lot recently, so I’d take the payout in Can $ and wait for it to appreciate.

See if the bank in Canada can open a £ account for you, and then transfer the money across internally when it’s at a good rate. Also, larger amounts being exchanged will normally mean more favourable rates.

No idea but is there a charge to withdraw and send from Canada to the UK?
If there is let’s say £30 a time then at once a month that’s £360
I say £30 as that’s my banks charge for sending money to Turkey

It does depend on how much needs the money.

Of course the rate may go up or down so waiting may or may not help

The risk averse option is take it canadian dollars

Convert half to Sterling now and leave half and see what happens to the rate

But the more she needs the money the more she should just take the hit and convert straight away

Looking at this graph I’d take the hit and convert

http://www.xe.com/currencycharts/?from=GBP&to=CAD&view=5Y

PS I understand these things but am not an expert on financial matters

I say £30 as that’s my banks charge for sending money to Turkey

TransferWise (link) would be much cheaper for you.

its complex, you need to assess a few issues such as mentioned above. Ex rates clearly are a big issue and you need to look at the medium term forecasts.

My 2 cents.

You want to invest the money in something, having it just sit in a bank account doesn’t really make sense.

So the question is would that be in Can $ (or better US $) or in £ or possibly in euros.

The £ is quite strong (so worse for converting foreign currency than it’s been for a while) but there is no common view as to whether it will decline back towards historic levels. For reference had you converted your 125k Can$ a few years ago you would have £79k whereas today its more like £66k

My own view is convert it and invest it in the UK if this is your Mum’s long term base. You could buy a better property for her, you could put it into the stock market or other investment products, keep some in cash etc etc

EDIT on transfers I used to use HIFX for larger amounts. If you are offered a cheque make sure you understand what it might cost to cash it, it’s not straightforward to cash a £ cheque if it’s drawn on a Canadian bank outside the UK and also check the exchange rate you are quoted. FYI my bank charges £4 for international transfers and I got 1.32 £/euro yesterday vs “market rate of 1.37. website/app XE.com is good for checking.

It seems your mother lives here now, is that a permanent move? If so, then her future outgoings are going to be sterling based and therefore it makes sense to match them with sterling assets unless you have a strong view on exchange rate. Therefore take it here.

New UK importer for Rocky Mountain/Cove/etc?

Seem to sell for the same in UK£ as cannuck$. Conversion losses be gone!

Might not be as daft as it sounds….

Non sensible answer. Whistler 🙂

If you’re going to convert to sterling find out the exchange rate and fees the you’re going to be charged by the Insurance Company/Bank. Usually specialist International money transfer companies offer much better rates –
I’ve used CaxtonFX & TransferWise in the past:
http://www.caxtonfx.com
http://www.transferwise.com

Jambalaya speaks the most sense so far. Does your mother want to take currency risk? Is she in a position where she can afford to?

I suspect that an IFA won’t be in a position to give you decent advice on GBP/CAD. An investment management firm/stockbrokers more so but it will still be limited.

Take care when speaking to currency brokers, the likes of which have been mentioned above. As far as i’m aware the industry is still very lightly regulated (albeit likely to change)and some charge as much as they can get away with. I work at a financial firm, not an fx broker albeit we do a fair bit for our clients, and we would charge 0.35% from spot in that size to give you an idea when speaking to them. The bank in Canada will be able to transfer directly to the FX broker and that will likely be your most cost efficient route. The bank will probably charge a fairly high fee for the FX, plus other costs transferring the cash.

Drop me an email if you want.

Just wait for Gideon’s next round of Austerity to kick in and push the UK back into recession and then watch the £ fall….

@Gotma – you are very kind, my posting history here doesn’t typically generate such feedback 🙂

As an aside an IFA is doing his job to make money, they will recommend a product they get commission on. Nothing wrong with this of course but its a fact of life.

As an aside an IFA is doing his job to make money, they will recommend a product they get commission on. Nothing wrong with this of course but its a fact of life.

I thought they’d banned that, or at least they had to fess up up-front about kick backs. Hence so many IFAs have gone out of business as they can no longer just line their pockets at their client’s expense.

You need to speak to a good financial adviser as the answer to any of the following questions will greatly influence the decision:

Is she dual national?
Where is she tax resident?
Does she need to take the money for daily living allowance or can it be invested
What tax implications are there on landing the money in the UK or Canada
If investing, what are the tax liabilities in either country.

Currently the dollar is the weakest it has ever been against the dollar so she would be technically receiving the lowest amount in sterling (assuming no further weakening).

Is she dual national?

YES

Where is she tax resident?

UK

Does she need to take the money for daily living allowance or can it be invested

She needs a chunk to pay funeral costs, then a small amount on a monthly basis to supplement regular income (pensions, etc.).

What tax implications are there on landing the money in the UK or Canada?

That I don’t know for sure, but as far as I understand, the life insurance payout is in itself not taxable either in Canada or the UK. Do you know with whom I could confirm that?

If investing, what are the tax liabilities in either country.

I don’t think that’s applicable, unless you know of an investment vehicle that would allow small monthly withdrawals.