Wondering what to do with inheritance money? Start by doing very little for a while. A large inheritance is rarely urgent, and the steps below put your decisions in a sensible order.
Key takeaways
- Australians typically receive an inheritance at about age 50, according to the Productivity Commission.
- Pausing for 30 to 90 days before any irreversible decision gives you time to confirm exactly what you've received.
- Australia has no inheritance tax, but CGT may apply when you sell, and a 2-year window can matter for inherited homes.
- Matching money to 3 timeframes (0 to 2, 3 to 7 and 7 or more years) keeps short-term goals out of growth assets.
- 3 professionals usually matter: an adviser, an accountant and a solicitor, all working from one plan.
What should you do first when you inherit money?
Pause before you decide anything.
Feeling pressure to act is normal, especially after a loss. Give yourself 30 to 90 days with no irreversible decisions.
Build a clear picture of what you've received.
- List every asset: cash, property, shares, super death benefits, insurance proceeds or a business interest.
- Confirm probate has been granted and whether any sale restrictions apply.
- Check for debts, rates or ongoing costs attached to each asset.
- Gather the will, estate distribution statement, title records and cost-base records.
Park the money somewhere safe.
A high-interest savings account, term deposit or offset account can hold funds while you do the groundwork. Write down your goals and values too, so the money has a job before it has a destination.
Do you pay tax on inheritance in Australia?
No, Australia has no inheritance or estate tax. Tax can still appear once you hold the assets, though:
- Capital gains tax if you later sell inherited property or shares, usually using the deceased's cost base.
- Tax on some super death benefits, depending on your relationship to the deceased.
- Changes to Centrelink assessments if you receive income support.
The 2-year window matters. If you inherit a home that was the deceased's main residence, selling within 2 years of the date of death may reduce or remove CGT, subject to conditions. Check with your accountant before you sign a contract.
How do you match an inheritance to your goals?
Your timeframe decides where each dollar belongs.
- 0 to 2 years: capital protection and easy access, such as cash, term deposits or an offset account.
- 3 to 7 years: a diversified mix of income and growth assets.
- 7 or more years: growth-focused assets, held with disciplined risk management.
For example, a home deposit planned within 2 years suits cash rather than shares. Mixing up timeframes is one of the most common ways a good plan goes wrong.
Is there a best way to invest an inheritance?
There's no single best way to invest an inheritance. It depends on your goals, timeframe and comfort with risk, and returns are never certain. Common options include:
- A diversified portfolio across cash, fixed income, and Australian and global shares.
- Super contributions, subject to contribution caps and your circumstances.
- Reducing non-deductible debt, or using an offset account to cut interest while keeping flexibility.
- Structured giving that reflects your values.
Should you pay off the mortgage or invest? It comes down to interest rates, cash flow and risk. Read our guide on whether to invest or pay down debt, then explore financial planning that connects debt, super and investing in one strategy.
Which inheritance mistakes cost people the most?
- Making large purchases before you have a plan.
- Ignoring the tax cost of selling inherited assets.
- Concentrating on one stock, property or the family business because it feels familiar.
- Chasing high returns promised by unlicensed operators.
- Waiting too long to get advice.
Familiarity isn't the same as diversification. Keep a record of statements, dates and decisions as you go.
When should you talk to a financial advisor about your inheritance?
Inheritance advice usually means fitting a lump sum into the life you already have, not starting from scratch. It begins with one conversation, not a sales pitch. A financial advisor can help you:
- Clarify goals, timelines and trade-offs.
- Compare paying down debt with investing.
- Coordinate with your accountant and solicitor on tax and estate matters.
- Set a review rhythm so your plan stays on track.
An inheritance is also a prompt to update your own will, super nominations and insurance beneficiaries. Our retirement and estate planning service covers that side.
Want the tax detail? Our guide to inheritance tax in Australia explains CGT timing and super death benefits. If the person who died had super accounts you didn't know about, our guide to finding lost superannuation can help you track them down.
An inheritance is the end of someone else's lifetime of saving, and taking your time with it is a way of honouring that. When you're ready, talk to a Morgans adviser about your next step.
Frequently asked questions
Do I pay tax on inherited money in Australia?
There's no inheritance or estate tax, but you may pay CGT on inherited property or shares you later sell. Check your cost base and speak to your accountant before you sell.
Should I pay off my home loan or invest the inheritance?
It depends on interest rates, cash flow and how much risk you're comfortable with. Parking funds in an offset account first keeps your options open while you compare the two with an adviser.
What if I inherit a house?
You can live in it, rent it or sell it, and each choice has different tax and cost outcomes. Selling within 2 years of the date of death may matter for CGT, so speak to your accountant first.
Who should I talk to first after an inheritance?
Start with a licensed financial adviser and an accountant, then add a solicitor if property or trusts are involved. Your adviser can coordinate the team and help you build a step-by-step plan.
What if I've inherited alongside siblings or other family members?
Shared inheritances often involve jointly held assets like the family home, and your goals and tax position may differ from theirs. It's worth getting your own advice even when the inheritance is shared.
