Receiving an inheritance can be a pivotal moment in life and it is common to feel pressure to do the “right” thing with the money. Gaining a lump sum can be a good trigger to reorder your finances for the future but some routes may prove more fruitful than others.

The best use of your money will depend on your age and circumstances. Telegraph Money examines three common scenarios below.

When you’re young

Younger inheritors could benefit from holding on to smaller sums to give them more flexibility in the future, said Amy Pethers from wealth manager Brewin Dolphin.

If they know that they will need access to the cash in the short term, for example less than three years, it could be prudent to keep it in cash, perhaps in Premium Bonds or an easy-access savings account.

If they think they won’t need it for more than five years they should consider investing tax-efficiently in shares. A sum of £10,000 invested in a stocks and shares Isa would be worth £16,289 after a decade if it achieved 5pc annual growth, Brewin Dolphin said.

Those who receive larger sums could also benefit from an Isa. The inheritor could move a sum equal to their full Isa allowance, currently £20,000 a year, to a stocks and shares Isa each year until it is eventually all within this tax-efficient wrapper. 

If they invested £350,000, it would be worth £570,113 after 10 years based on 5pc annual investment growth of £220,113 after fees, Ms Pethers said.

In addition to a taxable investment portfolio and Isas, they could benefit from making additional pension contributions. 

Pension contributions receive “top-ups” from HMRC in the form of tax relief. This means that money they would typically pay in tax goes into the pension instead. Basic-rate taxpayers receive an extra 20pc (of the gross sum) in additional contributions, while higher-rate and additional-rate taxpayers receive 40pc and 45pc respectively. 

This money won’t be accessible until at least the age of 57, however, so a pension is far less flexible than an Isa or taxable investment account and may not be the best option for younger savers.

Ms Pethers added: “They should also work out how much they want to keep as an emergency cash fund. We normally recommend about six months’ essential expenditure.”