How financial advisers can talk to clients about inheritance timing and cash flow gaps

Most advisers eventually sit across from a client whose parent has just died. The conversation usually starts with the emotional reality of grief and moves quickly into the practical: what does the estate look like, when will it pay out, and what do we do in the meantime. The cash flow gap between the death and the distribution is where advisers add the most value, and where the standard toolkit is often thinnest.

The gap most clients don't anticipate

Most clients underestimate how long estate administration takes. They know a will exists, they know they are a beneficiary, and they assume distribution follows within a few months. The reality is 9 to 12 months on average, and 18 months or more where property is involved or the estate is contested. And it lands on top of grief, a shift in family dynamics, and often unexpected cash outflows: funeral costs, travel, and time off work. See our guide on estate settlement timelines for the detail worth sharing with clients.

For clients whose financial plan didn't anticipate this transition, the gap can drive suboptimal decisions: selling long-held investments at the wrong time, drawing down super early, or making rushed decisions about inherited property because holding costs are eating into liquidity.

Framing the conversation

Three questions usually structure the discussion:

• What are the client's actual cash flow needs over the next 12 to 18 months? Not just the shortfall today, but the shortfall projected across the likely administration period. Include holding costs on inherited property, ongoing living expenses if income has been disrupted by caring responsibilities, and any specific short-term goals (school fees, a planned purchase, debt paydown).
• What is the estate's likely liquidity profile? An estate with significant cash and liquid investments can often make interim distributions. An estate whose value is concentrated in property has less flexibility, and beneficiaries typically wait until property sells.
• What's the tax cost of raising cash from other sources? Selling personal investments to bridge the gap might crystallise capital gains that could have been deferred. Drawing from super has tax implications and permanent balance impacts. This is often the piece clients haven't thought through.

How inheritance advances fit into the toolkit

Where the estate is confirmed but the timing is uncertain, an inheritance advance can be an efficient way to unlock a portion of the entitlement now without the client having to disturb their existing financial position. The advance is:

• Assessed on the estate, not the client's personal income or credit — which matters for clients whose income has been disrupted or who are already at capacity on personal borrowings.
• Non-recourse to the client's personal assets. The advance is repaid from the estate. If the estate produces less than expected, the client's repayment is capped at what they actually receive.
• Fixed in cost upfront. No variable rate risk, no compounding uncertainty. The client knows the total cost at each estimated settlement date at the outset.

Where a client's shortfall is $30,000 and their inheritance is $400,000, an advance is often cheaper on a total-cost basis than selling growth investments to raise the same amount particularly if the sale would crystallise CGT.

Where an advance isn't the right fit

Advances aren't universally appropriate. Cases where other options are usually better:

• Very short administration periods. If the estate will settle in under 2 months and the client can bridge that with existing liquidity or a small buffer, the cost of an advance isn't justified.
• Contested estates with unclear entitlement. Where a family provision claim could materially reduce the client's share, an advance may not be available or may be sized down significantly.
• Clients with strong short-term liquidity. If the client has offset balances or accessible term deposits that don't disturb long-term positioning, that's usually cheaper.

Tax and structural considerations

A few points worth flagging in client discussions:

• An inheritance advance is not itself taxable. It's an advance against an entitlement, not income.
• Tax outcomes of the underlying inherited assets are unchanged by an advance. CGT on inherited property still applies as it would have; super tax treatment for non-dependants still applies.
• Where the client is inheriting property they intend to hold long-term, an advance can preserve the 2-year CGT main residence exemption window if the alternative is selling other assets under pressure.
• You should confirm how an advance may affect benefits, particularly for age pension clients.

Working with Inherita as a referral partner

Advisers who work with Inherita typically use the platform in three ways: (1) as a reference option to include in cash flow discussions with beneficiary clients, (2) as a direct referral where the client has a clear entitlement and a defined shortfall, and (3) as a follow-up to more urgent conversations where clients need to make property or investment decisions quickly.

We work directly with the client and (with consent) their solicitor and executor. Advisers stay in the loop and don't need to be involved operationally. If you'd like to understand more about how the assessment works and what kinds of estates fit, our partners page has more detail.

Frequently asked questions

Have a client waiting on a distribution? We're happy to have a no-obligation conversation about whether an advance fits their situation.