What To Do With An Inheritance

Receiving an inheritance can be a significant moment in anyone’s life, often accompanied by a mix of emotions due to the loss of a loved one. Beyond the emotional processing, inheriting assets brings a financial responsibility that can shape your future.

What To Do With An Inheritance

Here’s our guide on how to navigate this situation thoughtfully and effectively.

1. Take Time to Process

First and foremost, allow yourself to grieve and process the emotional aspect of receiving an inheritance. It’s okay to take time before making any financial decisions. In many cases, there’s no immediate rush to act.

2. Understand What You’ve Inherited

Get a comprehensive understanding of what exactly you’ve inherited. Assets can range from cash, real estate, stocks, to personal items like jewellery or art. Some of these assets may have immediate financial implications, while others might be more long-term. Understanding the scope of your inheritance is crucial for effective management.

3. Evaluate Your Financial Situation

Before making any decisions, assess your current financial situation. This includes your debts, savings, investments, and upcoming needs. This evaluation will help you align your inheritance with your financial goals and needs, whether that’s paying off debt, saving for the future, or investing.

4. Consult with a Financial Adviser

Seeking professional advice is highly advisable. A financial adviser can provide valuable insights into managing your inheritance, tax implications, and planning for the future. They can help you develop a strategy that considers your financial goals, tax efficiency, and the best use of your inherited assets.

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5. Consider Debts and Emergency Funds

Before you start planning luxurious expenditures or investments, consider using a portion of your inheritance to pay off high-interest debts or to establish an emergency fund, if you haven’t already. This can provide financial stability and save you from potential financial strains in the future.

6. Think About Taxes

Although there are no inheritance or death taxes in Australia, some assets may have taxes applied. For example; taxes may be applied to superannuation benefits paid to adult children and capital gains tax can be applied to assets that are sold as part of finalising an estate. It’s important to understand any tax implications and speak to a financial adviser or tax professional who can help you navigate these complexities.

7. Invest Wisely

If your financial situation allows, investing a portion of your inheritance can help grow your wealth over time. Consider diverse investment options and think long-term. Investments can include stocks, bonds, real estate, or even furthering your education.

8. Plan for the Future

Think about how your inheritance can impact your future. This might be the right time to update or create your estate plan, including your will, to reflect your current situation and wishes. Planning for the future also means considering how your inheritance can help you achieve your long-term goals, whether that’s retirement, purchasing a home, or supporting family members.

Receiving an inheritance is a pivotal moment that requires careful thought and planning. By taking the right steps, you can honour your loved one’s legacy while ensuring your financial stability and future prosperity. If you’re navigating the complexities of managing an inheritance and looking for tailored financial advice, please feel free to contact us for expert advice and support.


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