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Living inheritances

Is a living inheritance right for you and your family?

When you hear the word ‘inheritance’, chances are you picture a Will being read long after someone’s gone. These days, more Australians aren’t waiting for the ‘one day’. Instead, they’re passing on a little or a lot of their wealth while they’re still here, so they can see the difference it makes to their loved ones.

This is known as giving a living inheritance. It’s becoming a popular way for parents and grandparents to lend a helping hand with life’s biggest moments. However, before you start financially helping your nearest and dearest, there are some important things to consider first.

Why give an early inheritance?

Research shows that 7 out of 10 Australians expect to leave money or assets to their family. Increasingly, they’re choosing to do it sooner rather than later.1 For many families, this shift comes down to rising living costs and housing affordability.2 A degree or training might cost

as much as a new car. And it may be harder to save for a house deposit today than a generation ago. Giving your adult children or grandchildren a financial boost for their major life milestones can make a world of difference.

It’s also about timing. Passing on your wealth only after death means your children might not receive it until their own retirement years. A living inheritance allows that support to be used when it’s needed most, like starting a family, paying for education or helping with childcare costs.

There’s also the emotional benefit of seeing the outcome of your living inheritance. You get to share the joy with your family in the moment.

What you should consider

Giving a gift during your lifetime can be meaningful, but it’s not a decision to rush. Here are some of the biggest considerations you can think about:

 

Your own retirement income

Giving too much can put your own future needs and dreams at risk. Once you’ve given your money away to loved ones, it’s not always possible to get it back. Unexpected medical costs, market changes or longer life expectancy could leave you needing more than you initially planned.

 

Age Pension rules

Centrelink has gifting rules if you receive the Age Pension. So, if you give away more than $10,000 in one financial year, or more than $30,000 over five years, the extra amount is counted as a financial asset.

If you give over these values, Centrelink will:

  • Count the excess in your assets test
  • Apply deeming and include it in your income test

This can impact your Age Pension entitlement. So it’s important to check the limits before making a large monetary gift.

Santina is a retiree and receives the Age Pension. She decides to give her daughter one of her cars that’s valued at $30,000 in the current financial year. With the gifting rules, the excess amount ($20,000) is counted as an asset for the next 5 years, which might impact her Age Pension payments. If she has given other assets in the past five years, then the total amount that’s considered a financial asset might be higher.*
 

* This example is for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different. When you exceed the gifting limits the excess amount is treated as a financial asset for a period of 5 years.

Did you know?
When you exceed the gifting limits the excess amount is treated as a financial asset for a period of 5 years.

Family dynamics

Money can change relationships. A gift to one relative might create tension with others, especially if they feel left out or treated unfairly. And life events like divorce or separation can mean money leaves the family in ways you didn’t intend.

 

Estate planning

If some family members receive gifts during your lifetime and others inherit later, disputes might arise. Documenting your decisions and seeking advice on how to structure them fairly can help avoid resentment and legal battles down the line.

Planning Ahead

A living inheritance can be a generous and rewarding choice, but it works best when it’s carefully planned. Open conversations with family members are vital, even if they feel uncomfortable at first. Understanding what you can (or can’t) afford and talking about it honestly can help manage expectations and avoid surprises later.

Professional advice can also make a big difference. A financial planner can help you understand the impact on your retirement income and Centrelink entitlements. A legal adviser can make sure your estate plan reflects any gifts given during your lifetime, so everything stays clear and consistent.

The right approach will look different for everyone. The key is to balance generosity with your own long-term security, so you can support the people you love without putting your future at risk.

Need help?

Getting your will and estate planning in order is an essential part of planning for the future. For more information, visit Wills and estate planning or discuss with a financial planner.

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1 Colonial First State research, 2025

2 Selected Living Cost Indexes, Australia, March 2025

3 AMP: 7 Key Charts on the State of the Australian Property Market

The information contained in this article is given in good faith and has been derived from sources believed to be reliable and accurate. No warranty as to the accuracy or completeness of this information is given and no responsibility is accepted by Aware Super Pty Ltd or its employees for any loss or damage arising from reliance on the information provided.

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