Inheritance, what now?

What To Do With an Inheritance?
Inheriting a large sum of money or property can be an intimidating experience. Unfortunately, many people do not manage their inheritance well enough and end up in financial trouble within two years!
Fortunately, there are ways you can make sure your windfall doesn’t result in disaster – if you know where to start. Here’s a few things to consider when being the beneficiary of a large amount of money and/or assets.
Before rushing in and spending your windfall however you choose, it’s essential to figure out which options will help deploy your money most effectively. From investing in real estate or stocks all the way down saving for a rainy day – there are many paths forward. However recent research has found that around 33% of people who received inheritances were worse off two years later due to mismanagement–so make sure not fall into this trap by doing your homework beforehand.

First steps after receiving an inheritance
After receiving an inheritance, it may be tempting to put your newfound money straight to work. However, the wisest strategy is often simply letting yourself acclimate first before making any decisions or investments. Sit back and relax a bit while doing some research on possible opportunities—this will help you make informed choices instead of blowing through all your funds too quickly with little return! Consider
placing the cash into safer options like Term Deposits and savings accounts until you’re ready for bigger moves such as seeking professional advice, as having these plans in place ahead of time increases chances that they’ll actually benefit you down the road. When exploring your options, a great place to start is with your financial goals. If you didn’t have goals before, you need them now.

Here are some common ones:

  • Paying off debt: If you have non deductible debt with a high interest rate, paying that off should be a priority.
  • An emergency fund: or commonly known as a ‘cash buffer’. Everyone’s buffer is different, but a rule of thumb is that you should consider around three to nine months of your living expense as a minimum amount to have in this account.
  • Deposit for a home: You may be hoping to buy a home in the coming years.
  • Retirement savings: Contributing to your superannuation fund at any stage in life normally results in at least a couple of benefits, those being, taxation and more savings upon retirement.
  • Other goals: You may want to save up for a fancy vacation, an addition to your home, a new car, a boat, or any of a number of things.

An inheritance can provide a once-in-a lifetime opportunity to securely reach for your dreams. Take some time and prioritise what’s important to you, then consider consulting with an experienced financial adviser who has the expertise needed to efficiently help make those goals a reality.

How inheritance works
Property and other assets can be passed on from one party to another in several ways. You might inherit property through someone’s will bequeathing it to you, or you might receive it via intestate laws that govern what happens to someone’s estate if he or she dies without a will. You can also end up with a windfall if someone has named you as a beneficiary for a financial account or insurance policy, or through a trust.

Seek advice
When you do start to feel ready, it is important that you develop a coherent plan that finds the right balance between securing your long-term future and having some short-term enjoyment. The best way to do this is to sit down with your financial adviser. Receiving an inheritance is usually a single experience in your lifetime, however any experienced financial advisor likely helps people with this scenario multiple times each year. It makes sense for you to leverage their experience and avoid unnecessary pitfalls. Working with your adviser also has the benefit of addressing the constant challenge we all face, we don’t know what we don’t know. We all have blind spots, and an independent third party, particularly one who understands your broader life goals, can be invaluable in helping you construct a plan that makes the most of the potential you have been granted.
As part of your plan, tax will be an important consideration. Fortunately, here in Australia we don’t have estate taxes, however there will be tax payable on death benefits from superannuation funds. This will have been paid prior to you receiving your inheritance, but it’s something worth being aware of if you are making plans prior to the estate being paid out.
Tax considerations primarily come into play when planning what you then do with your inheritance. An appropriate consideration of Australia’s tax regime is important when developing your plan and another reason why it is important to work with your financial advisor.

Need a Professional Opinion?
If you would like to understand your options after receiving an inheritance, please reach out as we can offer an obligation free review of your situation.
To make an appointment, please call 07 3709 8485 or email

Financial Planning advice is provided by Thesan Private Wealth, ABN 54 661 639 247, Corporate Authorised Representative #425962 of TFS National Pty Ltd, Australian Financial Services Licence No. 532141. This document contains general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider if it is appropriate for you. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. Past performance is not a reliable indicator of future performance.

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