What To Do When You Inherit Money Or Property in Australia
Inheriting money or property is something most Australians will experience - yet few know what to do when it actually happens. Principal Lawyer Gabrielle McManus walks through the legal, tax and financial steps, and why slowing down is usually the smartest first move.
Australians are inheriting more than ever before, and the amounts are growing.
Research cited in a 2021 Productivity Commission report estimated that $3.5 trillion in wealth will transfer from Baby Boomers to subsequent generations over the next two decades - around $175 billion a year. A 2024 report from wealth manager JB Were put the average current inheritance at $706,806.
For many people, an inheritance will be the largest sum of money they ever receive. It deserves to be treated accordingly.
Yet an inheritance rarely arrives at an uncomplicated moment. Most people receive one while they're still grieving, still dealing with paperwork, and often navigating family dynamics that can be unexpectedly charged. The instinct is to act - to feel like something is moving forward. That instinct is worth recognising, because it's also where most inheritance mistakes begin.
Why you shouldn't act immediately after inheriting
The most useful piece of advice for anyone who has received an inheritance is also the simplest: don't act immediately.
Grief affects decision-making in ways people don't always recognise at the time. The period following a death is not the right environment for major financial decisions. Where possible, delay any significant choices about inherited funds until the intensity of that initial period has passed.
There are practical legal reasons to wait as well:
Assets in a deceased estate generally cannot be distributed until a grant of probate or administration has been made by the court
There is a six-month window after the grant during which eligible people can make a claim against the estate - distributing early creates real legal risk for the executor
Tax obligations may only become clear once all assets are realised and final tax returns are lodged
An inheritance may include property, shares, or business interests, not just cash. Taking time to understand what you've actually received is not delay - it's common sense.
Not sure what you've inherited or what the process involves? We can help you understand where things stand before you make any decisions.
Could someone challenge the will?
Where an eligible person believes they haven't been left adequate provision, they may make a family provision claim against the estate. Eligible applicants include spouses, children (including stepchildren), grandchildren, and members of the deceased's household at the time of death.
An eligible person has six months from the date of the grant to bring a claim. During this period, it is best practice for the executor not to distribute estate assets. If a claim is made after distribution has occurred but within the window, the executor may need to recover the inheritance from those who have already received it - or meet the claim from their own funds.
As a beneficiary, your inheritance may not be certain until that window has closed. If there is any prospect of a family provision claim, take legal advice early.
Inheritance tax, CGT and superannuation: what applies in Australia
There is no inheritance tax in Australia. But that doesn't mean inherited assets are tax-free, and the consequences can vary significantly depending on the nature of the assets.
Capital gains tax is one area where the details matter. The CGT outcome can differ depending on whether an asset is sold by the estate before distribution or transferred to a beneficiary and sold later. There may be opportunities to achieve a better outcome if you take tax and financial advice before deciding how to receive your inheritance - not after.
Superannuation death benefits are another area where assumptions can be costly. Many people assume superannuation passes tax-free. It does, for certain dependants, but adult non-dependent children are often taxed on part of the benefit. Understanding this before an application is made can sometimes open up options.
If the will includes a testamentary trust, this deserves careful attention before anything is distributed. A testamentary trust comes into effect on the death of the will-maker and can offer significant advantages. This includes genuine asset protection for a beneficiary with personal liability exposure or going through a relationship breakdown, and meaningful taxation benefits, including the ability to distribute income to minor children at adult tax rates.
Families can inadvertently give up these benefits simply by distributing too quickly, without pausing to understand what the will had set up for them.
Not sure what you've inherited or what the process involves? We can help you understand where things stand before you make any decisions.
Legal, tax and financial advice: what to get first
Legal, tax and financial advice each serve a different purpose - and the order in which you seek them matters.
Start with legal advice if there are any questions about the will, your entitlements, or the possibility of a family provision claim. Involve a tax adviser or accountant before any assets are moved or sold, so that you understand the CGT and other tax implications before you make decisions.
A financial planner is most useful once the estate is settled and funds are clear - at that point you can think about how to put your inheritance to work from a stable, informed position.
If you're not sure where to start, start with us. We work closely with trusted accountants and financial advisers and can refer you to the right people at the right time.
There's no urgency that justifies skipping any of these steps. An inheritance that took a lifetime to accumulate is worth taking a few months to approach properly.
If you've received an inheritance and want practical legal guidance before you do anything else, our team is here to help.