Many parents and grandparents want to help their children or grandchildren financially during their lifetimes, rather than waiting until their estates are distributed. This is often called a “living inheritance.”
It might help with a house deposit, contribute to education, or simply provide financial security when it’s needed most. Seeing loved ones benefit from your support can be deeply rewarding. However, before making a significant gift, there are some important considerations to weigh up.
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Your Own Financial Security
The most significant risk with a living inheritance is giving away more than you can afford. It’s natural to want to help family, but remember you may still need your savings for:
- Day-to-day living expenses in retirement,
- Aged care or medical costs later in life,
- Unexpected events that could change your financial position.
Once you hand over the money or asset, you can’t easily take it back. Make sure your own future needs are fully covered first.
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Centrelink and Aged Care implications
Gifting assets can affect your eligibility for Centrelink benefits. Under the “deprivation rules,” if you give away more than the allowable threshold, Centrelink will continue to treat it as if you still own it when assessing your pension entitlements. Similarly, aged care fees can be impacted.
If you rely on government support now — or might in the future — it’s crucial to understand how a large gift will be assessed.
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Fairness Among Beneficiaries
Helping one child with a house deposit or financial boost can feel natural, but it may create resentment if other children don’t receive something similar. Unless you clearly document your intentions (and update your will accordingly), it can lead to disputes later.
You might consider whether to:
- Give equal amounts now,
- Record gifts as advances on inheritance, or
- Explain openly to family what you are doing and why.
- Tax And Legal Consequences
Not all gifts are tax-free. For example:
- Property transfers may trigger capital gains tax (CGT) for you as the giver and stamp duty for the recipient.
- Trusts or company structures can complicate ownership and tax responsibilities.
Legal and tax advice is essential before transferring significant assets to avoid unintended liabilities.
If you have any concerns about passing on a living inheritance to your loved ones, why not speak with a licensed adviser to get the answers you need?
