For many people, an inheritance represents far more than receiving money or assets. It often follows the loss of a loved one, making it an emotional and sometimes overwhelming experience. Alongside the grief, there can also be important financial decisions that deserve careful thought.
As a Financial Adviser in Geelong, I’ve found that many people don’t include a future inheritance in their financial plans. Others assume they’ll eventually receive one but have little idea of when it may happen, what it may involve, or how it could affect their long-term financial position.
While nobody should rely on an inheritance to fund their retirement, understanding how it may fit into your broader financial strategy can help you make better decisions when the time comes.
Australia’s Largest Wealth Transfer
Australia is currently experiencing one of the largest transfers of wealth in its history.
Over the coming decades, trillions of dollars are expected to pass from older Australians to their children and grandchildren. Much of this wealth will consist of:
- Family homes
- Investment properties
- Superannuation balances
- Shares and managed investments
- Cash savings
- Personal assets
For many families in Greater Geelong, an inheritance may become one of the largest financial events they’ll ever experience.
That doesn’t necessarily mean every inheritance will be substantial, but it does highlight why planning ahead can be worthwhile.
Should You Include an Inheritance in Your Retirement Plan?
This is one of the most common questions I receive.
My general advice is simple:
Build your retirement plan so it works without relying on an inheritance.
There are simply too many unknowns.
The amount inherited may differ from expectations. Circumstances can change. Medical or aged care costs may reduce an estate, and timing is impossible to predict.
If an inheritance eventually arrives, it can strengthen your financial position rather than becoming something your retirement depends upon.
More Than Just Money
An inheritance may include assets that require careful consideration.
These might include:
The family home
An investment property
A share portfolio
Superannuation death benefits
Collectables or valuable personal assets
Each asset comes with different financial, legal and tax considerations.
For example, inheriting a property may create decisions about whether to sell it, keep it as an investment or move into it. Those decisions may have capital gains tax implications that are worth understanding before acting.
The Importance of Estate Planning
Preparing an inheritance isn’t only about those receiving it.
It’s equally important for those leaving assets behind.
Having an up-to-date estate plan can provide certainty for your family and reduce the likelihood of disagreements during an already difficult time.
A good estate plan generally includes:
- A valid and current Will
- Enduring Powers of Attorney
- Appropriate beneficiary arrangements
- Consideration of tax implications
- Clear instructions regarding significant assets
Many Australians are surprised to learn that superannuation doesn’t automatically form part of their Will.
Instead, your super fund generally requires a Binding Death Benefit Nomination if you want to direct who receives your superannuation after your death.
Reviewing these nominations regularly is an important part of good financial planning.
Understanding the Tax Implications
One of the biggest misconceptions is that all inheritances are completely tax-free.
While receiving an inheritance itself is generally not taxable in Australia, some inherited assets may create tax consequences later.
Examples include:
- Selling an inherited investment property
- Selling inherited shares
- Receiving taxable components of superannuation death benefits
- Capital gains tax that may apply depending on the circumstances
Every estate is different, so it’s important not to assume the same rules apply to everyone.
Seeking professional advice before making major financial decisions can help avoid costly mistakes.
Family Conversations Matter
Money conversations are rarely easy.
Many families avoid discussing inheritances because they don’t want to create awkwardness or appear focused on money.
However, open conversations can often reduce uncertainty and avoid misunderstandings later.
Without discussing exact dollar amounts, families can often benefit from talking about:
- General wishes for the estate
- Who will act as executor
- Whether the family home is likely to be sold or retained
- Important documents and where they’re kept
- Any special circumstances affecting family members
Clear communication today can save considerable stress in the future.
Making Wise Decisions After Receiving an Inheritance
It’s understandable to feel pressure to make immediate decisions after receiving an inheritance.
In many cases, slowing down is the better approach.
Rather than making major purchases or investment decisions straight away, it can be worthwhile to consider how the inheritance fits within your broader financial goals.
It may help you:
- Reduce debt
- Strengthen your retirement savings
- Invest for long-term growth
- Assist children or grandchildren
- Build financial security for future generations
The best decision will depend entirely on your own circumstances and objectives.
How Financial Advice Can Help
Whether you’re expecting to receive an inheritance or planning how your own estate will eventually be distributed, professional advice can provide valuable clarity.
As a Financial Planner in Geelong, I work with individuals and families across Greater Geelong to help them make informed financial decisions at every stage of life.
Together we can consider:
- Estate planning strategies
- Retirement planning
- Superannuation advice
- Tax considerations
- Investment strategies
- Long-term wealth planning
Preparing today can make a significant difference to both your financial future and the financial wellbeing of those you care about.
If you’d like to discuss how an inheritance could affect your financial position, or you’d like assistance with estate planning, I’d be happy to help you develop a strategy that’s right for your circumstances.