Receiving an inheritance later in life
Written by Glen James
Host of the Retire Right & money money money (formerly my millennial money) podcasts & author of The Quick-Start Guide to Investing.
If you receive an inheritance, you might feel a mix of emotions—excitement, confusion, maybe even some stress. That’s totally normal, and taking it step-by-step can help you make the most of this gift. Here’s some guidance to keep in mind:
Take a moment to breathe and reflect
Losing someone and handling their legacy can be heavy. It’s okay to take a minute and let things settle before diving into financial decisions. I say this to everyone that receives an inheritance, no matter your age or stage of life—stop and let the dust settle. We can also get impulsive when really we need to let ourselves grieve, think through all of our options and make the best choices from there. You might decide to make a charitable donation on behalf of your loved one—these kinds of considerations play an important role in the emotional side of inheritances, so don’t skip past them.
Chat with some professionals
Tax and legal stuff (yep, they matter)
The good news: inheritances in Australia aren’t taxed directly. But if you’ve inherited property or shares, you might bump into things like capital gains tax. An accountant can help clarify any details and highlight any potential tax-saving moves. So book a chat with your accountant as one of your first steps to fully understand the tax implications of your inheritance.
Speak with your financial adviser
A financial adviser can be an incredible ally when an inheritance sum lands in your lap. They can help map out the right investment strategy for you, making sure your money aligns with your goals and works efficiently under Aussie laws. You might also find it challenging to make a decision, given the emotional impact, so having a third-party who isn’t as emotionally connected can be helpful in making a decision. An adviser can also help you understand how your inheritance may impact your Centrelink benefits. Reach out to us if you would like to be referred to a trusted adviser.
Consider super contributions
Contributing to superannuation is of course one of the key considerations when you receive a lump sum, and something a financial adviser would consider. Get to know where you are at with your concessional and non concessional contributions, plus any associated caps and consider what portion you might like to make as a contribution.
Keep your financial house in order
There are some basic housekeeping tasks you may also want to clean up before moving forward. If you are still tackling personal loans, credit card debt, buy-now-pay-later accounts or payday loans this could be the perfect opportunity to clear these and get back to a clean slate. Speaking of peace of mind, consider topping up your emergency fund so you’re ready for any unexpected bumps life throws your way.
Enjoy some fun goals!
Maybe there’s a lifestyle shift you’ve been dreaming of? This could be your chance to set up for more freedom in your retirement, travel, or even a step back from full-time work. What do you really want, and how can this inheritance support that? Whether it’s that new ride-on lawn mower, a kayak, a caravan, a kitchen reno—anything! You might have a bit of play money you can use to bring some joy to your life. What a wonderful way to honour the memory of your loved one: with fun and enjoyment.
Update your will and estate plan
This is a boring but necessary point: if you’ve got new assets, make sure your will and super nominations reflect those changes. Your solicitor can help ensure your wishes are clear and up-to-date (please don’t use will kits from the post office!).
Martin recorded an episode about receiving inheritances where he dug into more of the nitty gritty if you’re interested to dive deeper into this topic. Have a listen on Spotify or Apple Podcasts.
If you have lost someone recently, I send my condolences. I hope this information is helpful for you as you grieve and process.
Community question
Community member asks: where do I stand? I inherited a house several years ago, what's the go with capital gains and super?
Glen: thanks for the question—it's a big one, so let’s dive in.
When it comes to inheriting property, the tax treatment depends on whether the home was an investment property or a primary residence. If it was your parent’s main residence, and they lived there up until their passing (no rentals or business run from the home), there’s good news: typically, you can inherit it without an immediate tax liability or stamp duty. If you decide to keep it as your home, you’d continue enjoying that tax-free status.
Now, if you decide to rent it out, the property effectively becomes an investment. At that point, the cost base (the property’s value for tax purposes) is reset to the property’s market value at the date of inheritance. When you eventually sell, you’d pay capital gains tax (CGT) based on any increase in value from that point forward.
But if the property was an investment for your parents, meaning it was always rented out, things change. You’d inherit it with the original cost base (when they bought it), which likely means a larger capital gains hit on a sale. My tip? Talk with an accountant to help you make a plan that best suits your goals.
As for super, inheriting a property doesn’t impact your super directly, but if you decide to sell, you could consider how proceeds from the sale might support your retirement, whether it’s investing in super or other assets.
Hopefully, that clears things up a bit! Always happy to help untangle these tricky rules.
