Receiving an Inheritance

Changing of the guard

Australia is on the cusp of the biggest intergenerational transfer of wealth it has ever seen, with assets held now by the so-called ‘builders’ or over 65s, plus assets held by the younger baby boomers, amounting to more than 60 per cent of the nation’s private wealth.

However, behind these simple statistics are personal stories and sadness, as inheritance often follows the loss of someone close. It should be no surprise that an inheritance can trigger a range of emotions, making it harder to make good decisions about personal goals, and about the best use of any windfall.

In many cases, there may be quite a long time before the inherited assets are actually transferred, as the processes of settling an estate can take time to unfold. On paper, this is time which could be used planning for the future, but it may also be a time of major adjustment when people are dealing with loss and grief.

Asking questions

The fact that it takes some time to settle an inheritance can be a blessing in disguise as it allows time to review, to plan, and to prepare for any transfer of assets. For some people, it amounts to a break-through moment, a chance for a fresh start, an opportunity to move forward financially.

There are some typical questions you may face whenever a significant sum of money is involved. Do you sell the new assets to pay off the mortgage, or to prepare for an early retirement? What do you hold onto as treasured possessions for the next generation? Do you take a long-awaited holiday, or just put the money ‘away’?

Receiving an inheritance, of money or assets, can be the perfect trigger to take stock of your own financial situation. Depending on your age and circumstances, and the size and nature of the inheritance, it may also be a good time to review your own estate plan.

For many people an inheritance could be the foundation for a comfortable future. And, suddenly, that realisation can put the provisions you have made for future generations — or not made — into sharper focus.

Finding answers

When you want to make decisions which allow you to take advantage of your good fortune, it is important to know that a financial adviser will assist you. Together, you can plan ahead and step through the decisions required to manage a windfall; to find answers to questions like whether to keep or sell assets, and how to best plan for your future income needs and those of your family.

Advisers will work with other professionals involved in estate planning, especially legal advisers and accountants. This is important because, for example, the legal framework with estates can be complex; it also varies from place to place as both state and national laws can be involved.

Similarly, there may be significant taxation issues to address if you inherit shares, an investment property, or if there are superannuation benefits to consider.

Talking with a financial adviser will help you to work through these questions, to put a plan in place to meet your own immediate and long-term financial needs, and to provide you and those close to you with a solid foundation for the future.