Receiving an inheritance often comes at a difficult time, and the decisions that follow can feel overwhelming on top of everything else. Knowing what to do with an inheritance isn’t just about the money. It’s about making sure it reflects both your own goals and, often, the wishes of the person who left it to you.

At Yeates & Co, we help clients navigate exactly this kind of moment. This guide covers the practical steps to take, common mistakes to avoid, and when it’s worth getting proper financial advice on inheritance before making any big decisions.

What to Do With an Inheritance: First Steps

Before doing anything with the funds, it’s worth taking a breath. There’s rarely any urgency to act immediately, and rushing a decision is one of the most common regrets people have.

A sensible starting point usually includes:

Parking the funds somewhere safe while you take stock, such as a high interest savings account
Understanding exactly what you’ve received, cash, property, shares, or a mix of assets
Considering any tax, legal, or estate related obligations tied to the inheritance
Taking time to think about what actually matters to you before making commitments

There’s no rule that says you need to invest, spend, or pay off debt with an inheritance straight away.

Financial Advice on Inheritance: Common Options

Once you’ve had time to think it through, financial advice inheritance conversations usually explore a handful of common paths, depending on your circumstances:

Paying Down Debt

For many people, reducing or clearing high interest debt is one of the most effective uses of an inheritance, freeing up future cash flow and reducing financial pressure.

Building Your Investment Portfolio

Adding the funds to an existing investment strategy, or starting one, can help the inheritance grow over time in a way that’s aligned with your broader financial goals.

Boosting Superannuation

Depending on your age and contribution caps, contributing some of the inheritance to super can be a tax effective way to build long term retirement savings.

Creating a Cash Buffer

Setting aside funds as a safety net can provide genuine peace of mind, particularly if you don’t currently have one.

None of these options are automatically “right.” What matters is how they fit your personal situation, goals, and existing financial position.

What to Do With Inheritance Money in Australia: Key Considerations

There are a few considerations specific to what to do with inheritance money in Australia worth being aware of:

Inheritances themselves are generally not taxed as income, but earnings on invested inheritance funds may be
If the inheritance includes property, there may be capital gains tax implications down the track
Contributing to superannuation comes with contribution caps and eligibility rules that are worth checking first
If you receive Centrelink support, an inheritance may affect your entitlements depending on how the funds are held or used

These details can materially affect the best course of action, which is why generic advice from friends or family, however well meaning, doesn’t always apply to your situation.

Common Mistakes to Avoid

When it comes to inheritance advice, some of the most common mistakes we see include:

Making large financial decisions too quickly, before fully understanding the situation
Assuming the inheritance needs to be spent, invested, or allocated all at once
Overlooking tax or Centrelink implications
Not considering how the inheritance fits into a broader financial or estate plan
Letting emotional pressure, from family or otherwise, drive financial decisions

Taking a considered, structured approach helps avoid decisions you might later regret.

When to Seek Inheritance Financial Advice

It’s worth seeking inheritance financial advice if:

The amount is significant relative to your existing finances
The inheritance includes complex assets, such as property, shares, or a business interest
You’re unsure how it might affect your tax position or government entitlements
You want the funds to support a longer term goal, such as retirement, rather than being absorbed into everyday spending

At Yeates & Co, we help clients think through inheritance decisions calmly and strategically, so the outcome reflects what genuinely matters to you.

Frequently Asked Questions

What should I do with an inheritance first?
Take time before making decisions. Park the funds somewhere safe, understand exactly what you’ve received, and consider any tax or legal obligations before committing to a plan.

Is inheritance money taxed in Australia?
The inheritance itself is generally not taxed as income, though earnings on invested inheritance funds, or capital gains on inherited property, may be taxable.

Should I use my inheritance to pay off debt or invest?
It depends on your circumstances. Paying down high interest debt is often a strong option, but the right choice depends on your overall financial position and goals.

Does an inheritance affect Centrelink payments?
It can, depending on how the funds are held or used. It’s worth checking how an inheritance may affect your entitlements before making decisions.

Not sure what to do with an inheritance? [Contact Yeates & Co] to speak with one of our advisers.