7 Critical Steps to Take When Receiving an Inheritance  

financial advice inheritance

Properly managing an inheritance is crucial to ensure it benefits you and possibly future generations. Here are seven critical steps to take when you receive an inheritance: 

1. Pause and Reflect

Grieving the loss of a loved one is an emotional process. It’s important to give yourself time to reflect and not rush into major financial decisions. Avoid making impulsive purchases or investments immediately. This pause allows you to approach the inheritance with a clear mind and make sensible decisions with the help of an accountant Melbourne and/or financial advisor Melbourne. 

2. Understand the Nature of the Inheritance

Inheritances can take many forms, including cash, real estate, investments, or personal property. Each type of inheritance may have different legal and tax implications. Work with an estate executor or accountant Melbourne to get a complete understanding of what you’re inheriting and any conditions tied to it including tax. 

3. Consult Financial and Legal Professionals

Seeking advice from a financial advisor Melbourne, accountant Melbourne, and an estate lawyer is essential. They can help you: 

  • Navigate tax obligations, such as any taxes including capital gains tax. 
  • Evaluate and manage investments. 
  • Understand any legal requirements or debts associated with the inheritance. 

Professionals can guide you on how to maximize the value of your inheritance while minimizing your tax liabilities. 

4. Set Clear Financial Goals

Determine how the inheritance fits into your overall financial plan. Are you looking to pay off debt, invest for retirement, fund a child’s education, or start a business? Clear goals will help you allocate the inheritance effectively and avoid wasting it on non-essential expenses. Best to seek advice from a financial advisor Melbourne or accountant Melbourne who can help you determine what to do with the inheritance. 

5. Pay Off High-Interest Debts

If you have high-interest debts like credit cards or personal loans, consider using part of your inheritance to pay them off. Reducing or eliminating these loans can often be the best investment that can be made with the inheritance. Again, best to contact an accountant Melbourne who can guide you to ensure you make a prudent financial decision. 

6. Invest Wisely

A financial windfall is an opportunity to grow your wealth. Consider diversifying your investments to include: 

  • Stock market investments. 
  • Real estate. 
  • Precious metals like gold or silver 
  • And if you would like to take on a little more risk, crypto investments. 

Discuss options with a financial advisor Melbourne to create an investment portfolio that aligns with your risk tolerance and long-term goals. 

7. Create or Update Your Estate Plan

An inheritance is a good reminder to ensure your own estate plan is up to date. This includes: 

  • Writing or revising your will. 
  • Setting up trusts including testamentary trusts for your beneficiaries. 
  • Updating beneficiaries on insurance policies. 

Planning ahead ensures that your assets will be distributed according to your wishes, tax is minimised and most importantly that you can provide peace of mind to you and your family. 

An inheritance is a powerful financial tool that can significantly impact your life if managed wisely. By following these seven critical steps, you can help protect the future of you and your loved ones. Always seek professional advice from a financial advisor Melbourne and/or accountant Melbourne and take a thoughtful, strategic approach to make the most of your inheritance. 

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Nobel Thomas Accounting

Noble Thomas has created this content to uphold our dedication to proactive services and advice for our clients. We aim to provide up-to-date information and events to keep our clients informed. Please note that any advice given is of a general nature and may not consider your personal objectives or financial situation.

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