How to invest an inheritance or windfall


“I was feeling dissatisfied with my financial position because I felt that I did not have a good overview of my position nor was my position being monitored by an expert …  Alison and her company provide me with a range of information from a very informative website to prompt face to face meetings.

I have every confidence that Alison and Lyfords will continue to meet my need for independent high financial advice, be transparent in their dealings with me, and be professional in their approach to their work, which is helping me meet my financial goals.”

Julie C

Receiving an inheritance can pose several challenges. It may entail a substantial influx of cash, investments, real estate, and valuable assets all at once, making it difficult to determine the most suitable way to handle it.

While these inherited assets are fundamentally similar to any other financial resources, the experience can be overwhelming for some individuals. If you find yourself in this situation, don’t hesitate to seek guidance from a financial advisers firm such as Lyfords.  Effectively managing your inheritance is crucial, as it has the potential to significantly enhance your financial situation.

Optimal strategies for handling your inheritance typically include using it to pay off debts, establishing an emergency fund, and making strategic investments.

An inheritance may include a cash payment, house/s, investments, jewelry etc. Prioritising how your inheritance is used is essential.

If you have any high interest debt such as credit cards or loans then it may make sense to pay these off first. Contact us now and we can guide you through your decisions.

Why you should seek financial advice

When you receive an inheritance what are the first things you might think of doing?  Buying a new car, doing that house renovation you have been putting off, going on holiday, gifting to your children so that they can purchase their first home. You have many choices and it is prudent to seek help form an experienced financial adviser if the inheritance is substantial.

Property relationship issues

It is important to note an inheritance is separate property as it’s considered to be a gift. If those inherited items or cash assets are mixed with relationship property, then they are likely to then become relationship property. For example if a cash inheritance is paid into a joint account or is used to purchase an asset that is jointly used then it falls under the Property Relationships Act.

You can separate your inheritance from your relationship.  For example setting up an investment portfolio in your own name. Provided no additional investments are made to the portfolio from joint assets.

Another way to separate your inheritance is to enter into a contracting out agreement with your partner under the Property Relationships Act.  This is often referred to as a “pre-nup” or “pre-nuptial agreement”. This agreement would specify how the inheritance, regardless of its use, is treated upon separation.  A contracting out agreement can be entered into at any point before, or during, the relationship.

What to do with inherited real estate?

You have three choices; sell the home, rent it out, or live in it. Each of these choices will carry an emotional component for you which you may need to come to terms with. Selling may be your easiest option.

What to do with inherited investments?

You could be inheriting shares, bonds or an established investment portfolio. It can be overwhelming to receive all these investments, especially if you are not an experienced investor. This is a good reason to use a financial advisers firm such as Lyfords. Firstly we look at your current financial situation (debts and existing investments) then we would look at your goals and objectives.

An important aspect of investing is identifying your risk-return profile and seeing how your inheritance fits in or whether a restructure is required. Will you continue to work etc.?

To make the most of your inheritance, after paying down any high interest debt, is to invest in a well diversified investment portfolio. Have a read of our blog on investing an inheritance.

Contact us