You’ve just received an inheritance in Australia, whether it’s money, property, shares, or investments, but what are your next steps?
The best advice that we give is to wait, to process and deal with all the emotions that come with receiving this inheritance. Once you’re ready, then it’s time to think about what you want, and not just that car you’ve always dreamed of, but maybe you want to help your children out, or you might want to move or retire.
Our first piece of advice? Take a breath.
Take your time and process everything. Once you’re ready, then it’s time to start thinking about your goals. This may include helping your children out, paying off debts, buying a home, investing for the future, or even retiring sooner.
What to with inheritance money in Australia
When it comes to receiving an inheritance, it’s not just about what you can do with the money, it’s about making sure you’re doing it in the most tax-effective, financially sound way.
There are a lot of moving parts:
- Are there any tax implications?
- Should you invest some of the money?
- What about paying off the mortgage?
- Will gifts to family impact your Centrelink or pension entitlements?
- What if you’ve inherited a property with siblings?
As your financial advisor we take time to understand your previous budgeting habits, your personal circumstances and your long-term goals, then develop a tailored plan that ensures you’re making the most of your inheritance today and all the tomorrows after.
Do You Pay Tax on Inheritance in Australia?
The question ‘Do I have to pay tax on my inheritance?’ is often the number one question we are asked.
The good news is that in most cases, there’s no direct inheritance tax in Australia. However, and it’s a big however, there can still be tax consequences depending on what you’ve inherited and what you do with this money.
For example:
- Inherited property can attract capital gains tax (CGT) when sold.
- Superannuation death benefits can be taxed depending on who receives them.
- Gifts to family members might affect your Centrelink.
When solicitors are dealing with clients receiving an inheritance, their recommendation is to seek financial advice. And as financial advisors, we in turn suggest to any client receiving an inheritance to seek taxation advice also, so that your inheritance is received in the most tax efficient way. Because we don’t want you to pay unnecessary tax. Ultimately, the right structure from the beginning can help you avoid unexpected tax implications in the future.
We can’t stress enough the importance of seeking the expertise of a tax agent or accountant. As your financial advisor, we work hand in hand with your accountant on your financial strategy. We can also recommend our experienced accountants within our office if you don’t have a tax professional.
A very important step to minimise potential family disputes it to ensure that you have a well thought out Estate Plan. Many disputes come from either there being no Estate Plan at all or there being surprises or family changes that weren’t documented in a timely manner. Please seek legal advice for this.
How long does it take to get inheritance money in Australia?
Many factors come into play when receiving your inheritance payment. One major issue is when there are any family disputes in relation to the inheritance, which can often drag this process out. This can then take months or sometimes even years. The running theme with clients is that they never thought an inheritance would split their family. We advise it can and often it does.
Sadly, we’ve seen many families struggle during this time, especially when expectations or communication haven’t been clear. If you’re navigating this, we understand how challenging it can be. We’re here to offer guidance during what is often an emotionally and financially complex time. Our free checklist helps you to navigate through this tough time leaving no stone unturned.
Why choose us?
We’ve helped many clients make smart, confident decisions after receiving an inheritance. Sharon Goodwin is our experienced financial advisor, bringing years of insight and expertise. And if you don’t already have a trusted tax agent, our in-house accountants are here to make everything as seamless as possible.
Get in contact today.
If you’ve recently received an inheritance (or are about to), don’t go it alone. This is a one-time opportunity to make some really impactful decisions for your future and we’re here to help you get it right. Reach out for a free, no-obligation chat and let’s talk about how we can make this inheritance work best for you.
