What should I do first when I receive an inheritance?

Start with the few things that are time-sensitive. If you've inherited a home you might sell, note the two-year capital gains window from the date of death. If you're on a Centrelink payment, report the inheritance, generally within 14 days. And get advice before touching inherited super. Once those are handled, you can take your time with the bigger decisions.

Is there tax on inheritance in Australia?

No. Australia has no inheritance or estate tax, so money you inherit generally isn't taxed when it arrives. That said, it isn't always tax-free. Capital gains tax can apply later when you sell inherited assets like shares or an investment property, and inherited superannuation can be taxed when it goes to adult children.

Should I pay off my mortgage with an inheritance?

Often it's a smart move, but not always the whole answer. Clearing debt you can't claim on tax is low-risk and freeing. The trade-off is access, because money in your loan is hard to draw back out. Weigh paying down the mortgage against keeping some accessible, and against contributing to super.

How does an inheritance affect my Age Pension?

It can reduce it. An inheritance adds to the assets and income Centrelink assesses, which may lower your payment or, for larger amounts, pause it. It's worth modelling the impact before you spend or gift, so nothing catches you off guard. There are legitimate ways to structure the money that can soften the effect.

Can I give some of my inheritance to my children?

Yes, and there's no gift tax in Australia. The catch is Centrelink. If you're on a means-tested payment, only $10,000 a year and $30,000 over five years is ignored. Give more than that and the excess still counts against you for five years. Your own security should come first regardless.

Do I pay tax on inherited superannuation?

Sometimes. If adult children inherit your super, the taxable portion can be taxed at up to 15%, plus the 2% Medicare levy. A spouse or a dependent child under 18 usually receives it tax-free. If you're planning ahead, there are legitimate strategies to reduce this while you're still alive.

How long do I have to decide what to do with an inheritance?

There's no set deadline, and rushing is the bigger risk. Give yourself room to breathe and let the money sit safely in the meantime. The one thing worth doing early is checking any time-sensitive tax, such as capital gains timing on inherited property. The rest can wait until you feel ready.

Do I need a financial adviser for an inheritance?

Yes, in most cases, and particularly if the inheritance is sizeable, includes property, shares or super, or could affect your pension or tax. Financial advice from an accredited financial adviser can help you avoid making costly mistakes and provide you with the peace of mind that you are making the right decisions specific to your situation.

Making the right decisions with an inheritance | White Rabbit Advisory — White Rabbit Advisory | Financial planning for life's twists and turns

By Nicola Beswick, Founder & Certified Financial Planner®

Receiving an inheritance brings a mix of emotions - grief, confusion, and the pressure to make the most of this generous gift.

You feel the weight of this responsibility and keep getting stuck in a loop of questions:

What’s the best way to use this money for my future?
Do I keep or sell inherited assets like property, shares or businesses?
Should we distribute some of the inheritance to our kids?
What about tax?

What started as a windfall can quickly become a whirlwind of worry.

This weight of getting inheritance decisions right is being felt across Australia.

The great wealth transfer

Australia is in the middle of the biggest wealth handover in its history, often called the great wealth transfer.

The Productivity Commission estimates around $3.5 trillion in assets will pass between generations by 2050. Inherited assets already total about $120 billion a year, and that's tipped to almost quadruple to $500 billion a year within 25 years.

Most of it sits in the two things Australians hold most of: the family home and superannuation. And around one in two of us have either received an inheritance or expect to receive one.

The inheritance paradox

Common as it is, an inheritance is rarely simple. Whilst it can be life-changing money, it seldom arrives feeling like a windfall.

For most people, it comes through loss. So while one hand holds a sum that could reshape your future, the other is still grieving the person who left it. Clear thinking is hard to come by in that fog.

And the decisions carry real weight. What you do with an inheritance can send ripple effects across generations, steadying your family for years to come, or quietly creating problems that only surface later.

If an inheritance has come your way, or one is on the horizon, the wisest move is to slow down and take a measured approach, one that weighs up every facet before you act.

Make the right decisions with an inheritance

1

Step 1

Understand what you’ve received

2

Step 2

Tackle the ticking clocks

3

Step 3

Prioritise your windfall decisions

Step 1: Understand what you've received

Before any decisions, get clear on exactly what mix of assets you have received.

Australia has no inheritance or estate tax, so you don't pay tax just for receiving money or assets. The tax usually comes later and applies only to certain assets when you sell or when super passes to adult children.

Cash is the simplest. No tax when it is received.
The family home is generally capital-gains-tax-free, within limits.
Investment property can attract capital gains tax, and there's a time limit if you plan to sell (see Step 2).
Shares and managed funds cost no tax to inherit, but capital gains tax can apply when you sell.
Superannuation can be taxed when it passes to adult children. See ATO information.

Step 2: Tackle the ticking clocks

Grief and paperwork are a cruel combination, and it feels unfair that anything should be urgent right now. But a few things genuinely are, and catching them early protects you from costly, avoidable surprises.

Tell Centrelink if you're on a payment. An inheritance is a change in your circumstances, and you're generally expected to report it within 14 days. Leaving it can create a debt you have to pay back later.
Superannuation death benefits have their own rules.How and when it's paid changes the tax, and for a surviving spouse some options come with time limits. Get advice before you sign anything.
Keep any inherited property covered.An empty house still needs insurance, rates and upkeep. A quick call to the insurer avoids an expensive gap.
An inherited home comes with a two-year clock. If it was the person's main home, you generally have two years from the date of death to sell it without paying capital gains tax. After that, CGT can apply to the growth. If selling is even a possibility, note that date now.
Hold a large sum somewhere safe.Bank deposits are government-guaranteed up to $250,000 per person, per institution. If you've inherited more, spread it across a couple of banks to protect the lot while you decide.

Step 3: Prioritise your windfall decisions

There's no perfect formula for managing an inheritance, and the right balance looks different for everyone. But when every option feels equally pressing, a simple order helps.

We call it the Steady, Secure, Savour, Share approach.

Steady, Secure, Savour, Share approach to inheritance

1

STEADY

Pay down your debts, top up your emergency fund, get your insurances up-to-date.

2

SECURE

Top up your super, invest for your timeline and risk comfort. Future you will be thankful.

3

SAVOUR

With the essentials handled, enjoy this gift. Take the trip, buy the caravan, get the car you’ve always wanted, guilt-free.

4

SHARE

Help the kids and grandkids, once your future is secure. If you’re on a pension or benefit, mind the gifting rules.

1. Steady the ground

First, take the pressure off. This is the low-risk, high-relief stuff.

Pay down your mortgage, credit cards and personal loans.
Top up your emergency fund for life's surprises.
Make sure your insurances are up-to-date.

2. Secure your future

This is often where an inheritance does its quietest, most valuable work. It might mean bringing your retirement forward, or finally putting the fear of running out of money to rest.

Top up your super. Putting some into superannuation can be one of the most tax-effective moves available to you, and there are contribution strategies that make a real difference to what you keep. If you're on a Centrelink payment, it can also affect how your money is assessed. It's worth getting the timing and the amounts right, because the caps and rules are strict.
Invest for your timeline and your risk comfort. Money you won't need for a while can be invested to grow, but the right mix depends on when you'll need it and how much movement you can stomach along the way.

3. Savour it, without guilt

With the foundations in place, you've earned the good part. This gift was meant to be enjoyed.

Take the trip you've carried in the back of your mind for years. Some experiences shouldn't wait, and it's often a fitting way to honour the person who made it possible.
Buy the thing you've always wanted. The caravan for the retirement you've been dreaming of, the reliable car, the boat. There's nothing wrong with turning some of this into joy, as long as it sits comfortably inside the bigger plan.

4. Share it sensibly

For many people, helping the people they love is the first thing they think of, and it comes from a beautiful place.

Help the kids or grandkids, once your own footing is secure, so a gift today doesn't quietly become your shortfall later.
If you're on a pension or benefit, check the gifting rules before you hand anything over (see the box below).

As featured in The Age

Nicola weighed in on handling an inheritance in The Age, on what to do when you’re part of the sandwich generation, balancing kids and ageing parents while looking after your own future.

A note on gifting and Centrelink

If you’re at or over Age Pension age, or you receive a means-tested Centrelink payment (like the Age Pension, Disability Support Pension or a carer payment), giving money away comes with rules worth knowing.

You can gift up to $10,000 in a financial year, and no more than $30,000 over five years.
Go over that, and the extra is treated as a “deprived asset”. Centrelink keeps counting it for five years and deems it to earn income, which can lower your payment.
A genuine loan, meant to be repaid, is treated differently from a gift.

So before you help the kids or grandkids with a larger sum, it’s worth checking the impact first. A little planning protects both the gift and your payment.

Make an inheritance count

If you've come into an inheritance and the options feel like a whirlwind, we can help you figure it out.

We understand the complex legalities and emotions of being an executor or beneficiary. We provide guidance and support that helps you make confident long-term decisions that are right for you while respecting your loved one's legacy.

Book a chat

White Rabbit Advisory helps you make sense of your inheritance, so you know how to save, invest and spend your gift while honouring your loved one's wishes. We're beside you for all of it: executor support, personalised plans, navigating family dynamics, avoiding tax traps, finding the right investments, and looking after your future.

FAQs

Start with the few things that are time-sensitive. If you've inherited a home you might sell, note the two-year capital gains window from the date of death. If you're on a Centrelink payment, report the inheritance, generally within 14 days. And get advice before touching inherited super. Once those are handled, you can take your time with the bigger decisions.
No. Australia has no inheritance or estate tax, so money you inherit generally isn't taxed when it arrives. That said, it isn't always tax-free. Capital gains tax can apply later when you sell inherited assets like shares or an investment property, and inherited superannuation can be taxed when it goes to adult children.
Often it's a smart move, but not always the whole answer. Clearing debt you can't claim on tax is low-risk and freeing. The trade-off is access, because money in your loan is hard to draw back out. Weigh paying down the mortgage against keeping some accessible, and against contributing to super.
It can reduce it. An inheritance adds to the assets and income Centrelink assesses, which may lower your payment or, for larger amounts, pause it. It's worth modelling the impact before you spend or gift, so nothing catches you off guard. There are legitimate ways to structure the money that can soften the effect.
Yes, and there's no gift tax in Australia. The catch is Centrelink. If you're on a means-tested payment, only $10,000 a year and $30,000 over five years is ignored. Give more than that and the excess still counts against you for five years. Your own security should come first regardless.
Sometimes. If adult children inherit your super, the taxable portion can be taxed at up to 15%, plus the 2% Medicare levy. A spouse or a dependent child under 18 usually receives it tax-free. If you're planning ahead, there are legitimate strategies to reduce this while you're still alive.
There's no set deadline, and rushing is the bigger risk. Give yourself room to breathe and let the money sit safely in the meantime. The one thing worth doing early is checking any time-sensitive tax, such as capital gains timing on inherited property. The rest can wait until you feel ready.
Yes, in most cases, and particularly if the inheritance is sizeable, includes property, shares or super, or could affect your pension or tax. Financial advice from an accredited financial adviser can help you avoid making costly mistakes and provide you with the peace of mind that you are making the right decisions specific to your situation.

White Rabbit Advisory Pty Ltd is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. You should obtain financial advice relevant to your circumstances before making financial decisions. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and White Rabbit Advisory Pty Ltd and its related bodies make no representation as to its accuracy or completeness.

White Rabbit Advisory Pty Ltd (ABN 54 676 177 138) is a Corporate Authorised Representative (No. 1314020) of Personal Financial Services Ltd (ABN 26 098 725 145). Australian Financial Services Licence (No 234459).

Making the right decisions with an inheritance