Key Takeaways
- Press pause. Park funds safely while you confirm what you received, obligations, and any tax implications.
- Build a plan that fits your goals and timeframes. Prioritise cash buffers, debt decisions, investing, super, and estate wishes.
- Get advice early. A financial adviser and tax accountant can help you avoid costly mistakes and set up a long-term strategy.
- Use professional inheritance financial advice to align tax, super, investing, and estate planning decisions.
Receiving a large inheritance can be life-changing. It can also feel overwhelming. The right first steps help you protect capital, make clear decisions, and turn a windfall into lasting financial security. This guide walks you through a practical process Morgans advisers use with clients every day, with a focus on inheritance financial advice tailored to Australian rules.
Step 1: Pause and assess your situation
Before making big choices, slow down.
- List the assets you have inherited: cash, property, superannuation, shares, term deposits, insurance proceeds, or a business interest.
- Confirm control and timing. Has probate been granted? Are there executor timelines or sale constraints?
- Check any liabilities. Some assets may come with debts, fees, rates, or ongoing costs.
- Gather documents. Will, probate, estate distribution statement, title records, super death-benefit statements, cost-base records for property and shares.
Short term, consider holding funds in high-interest savings or term deposits while you complete the groundwork. ASIC’s Moneysmart has clear tips on handling large amounts of money.
Step 2: Understand the emotional impact
An inheritance often follows the loss of a loved one. It is normal to feel pressure to act quickly. Give yourself time.
- Avoid large purchases until you have a plan.
- Set simple rules. For example, no irreversible decisions for 30 to 90 days.
- Write down your goals and values. What will this money do for you, your family, or future generations?
- If you feel rushed by offers or schemes, step back and check for red flags. Scamwatch has practical guidance.
Step 3: Map your goals and timeframes
Your strategy should mirror when you will need the money.
- 0 to 2 years (short term): capital protection and liquidity. Cash, term deposits, or an offset account.
- 3 to 7 years (medium term): a diversified mix of income and growth.
- 7 years plus (long term): growth-focused assets with disciplined risk management.
Align each dollar with a job: emergency fund, debt choices, home or investment property plans, children’s education, retirement savings, or charitable giving.
Step 4: Tax and rules to consider
Australia has no inheritance or estate tax. You can still face tax on income or gains from inherited assets. Seek written advice before selling or restructuring.
- Property. Capital Gains Tax (CGT) can apply when you sell. A main-residence exemption may be available in some cases and there is a two-year timing rule, with possible extensions in limited circumstances. The ATO has more information on extensions to the 2-year ownership period.
- Shares and managed funds. You usually inherit the deceased’s cost base. Future gains or income may be taxable in your hands.
- Superannuation death benefits. Tax depends on your relationship to the deceased and the components of the benefit. ATO guidance explains who counts as a dependant and how tax is applied.
- Pension and benefits. A large inheritance can affect Centrelink assessments under the income and assets tests. Check how your position may change.
Step 5: Build a financial strategy
This is where professional inheritance financial advice makes a clear difference. A tailored strategy can help you:
- Preserve capital while generating reliable income.
- Create an optimised tax position.
- Invest based on your risk profile and timeframes.
- Plan for retirement or intergenerational goals.
Common strategies include:
- Diversified portfolios. Combine cash, fixed income, Australian and global shares, property, and alternatives.
- Superannuation contributions. Use concessional and non-concessional contributions where appropriate, subject to caps and personal circumstances.
- Debt reduction or offset use. Compare the after-tax, after-fee return from investing with the guaranteed saving from reducing non-deductible debt.
- Property investment. Weigh cash flow, rates, maintenance, tenancy risk, and diversification.
- Philanthropy. Structured giving can align with your values and tax planning.
Step 6: Make considered debt decisions
A lump sum tempts quick mortgage paydowns or new borrowing. Test options with advice.
- Offset first. Parking cash in an offset account can cut interest while keeping flexibility.
- Compare outcomes. Paying down non-deductible debt is often strong, but do not drain all liquidity.
- Avoid new lifestyle debt. Large purchases can wait until your plan is set.
Step 7: Invest with discipline
Good portfolios are simple, diversified, and low friction.
- Use broad market building blocks supported by high-quality research.
- Keep fees and taxes in focus.
- Rebalance periodically to maintain your risk level.
- Document an investment policy statement you can stick to when markets move.
Step 8: Update your own estate plan
An inheritance is a prompt to review your legal documents.
- Update your will and enduring powers if your situation has changed.
- Review super nominations and life insurance beneficiaries.
- Consider a testamentary trust if suitable for family protection or flexibility.
Learn more about Estate Planning with a Morgans adviser.
Step 9: Avoid common mistakes
Many Australians make avoidable errors with inherited wealth, such as:
- Making large purchases without a plan
- Ignoring tax consequences when selling assets
- Failing to diversify or taking concentrated bets
- Chasing high returns promised by unlicensed operators
- Not seeking professional advice early enough
Use checklists, document your decisions, and keep a record of key statements and dates.
Step 10: Work with a Morgans financial adviser
Every inheritance is unique, and so is your financial journey. A Morgans adviser can help you:
- Clarify goals, timelines, and trade-offs
- Model debt vs invest decisions
- Design a diversified portfolio to suit your risk profile
- Coordinate with your accountant and solicitor on tax and estate matters
- Set up a review rhythm so your plan stays on track
Contact us today for a free consultation with a Morgans adviser. Let us help you turn your inheritance into long-term financial security.
Learn more with our superannuation advice, financial planning, retirement and estate planning.
Learn more with our superannuation advice, financial planning, retirement and estate planning.
Frequently asked questions
1) Do I pay tax on inherited money in Australia?
There is no inheritance or estate tax. You may still pay tax on income or gains from inherited assets. CGT can apply if you sell property or shares you inherited. Tax may apply to some superannuation death-benefit payments depending on your relationship to the deceased and the components of the benefit.
2) Should I pay off my home loan or invest the inheritance?
It depends on interest rates, risk tolerance, cash flow, and timeframes. Many clients park funds in an offset account first, then decide with advice. Compare the saving from reducing non-deductible debt with the expected after-tax return from investing. A written plan helps you commit to the path you choose.
3) What if I inherit a house?
Decide whether to live in it, rent it, or sell. Each option has different tax, cost, and lifestyle impacts. Keep records of valuations, costs, and dates. Speak to your adviser and tax specialist before you sign a contract. ATO guidance covers CGT rules and timing, including the two-year rule and limited extension grounds.
4) Who should I talk to first?
Start with a licensed financial adviser and a tax accountant. If property or complex structures are involved, engage a solicitor. Your financial adviser can coordinate the team and build a step-by-step plan.
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