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. But 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 to see the difference it makes to their loved ones. This is called a living inheritance, and it’s becoming a popular way for parents and grandparents to give a helping hand with life’s biggest moments. It all sounds great, and it can be for some. But 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 in 10 Australians expect to leave money or assets to their family, and 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. Being able to give your kids (or grandkids) 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 should you 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 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 gift 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.

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. 
 

How SASS benefits fit in

If you’re a SASS member, it’s important to remember that your death benefit is governed by scheme rules. In most cases, benefits are paid to an eligible spouse or de facto partner. If there isn’t one, the benefit usually goes to the personal representatives of your estate. This means you can’t directly gift your SASS benefit outside those rules. 

Understanding how your super fits into your broader estate plan can help you decide how much to give now versus what may pass on later. 

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?

Learn more about SASS death benefit rules at statesuper.nsw.gov.au.

Getting your will and estate planning in order is an essential part of planning for the future. If you need help deciding what’s right for you, we’re here to help. Call us on 1800 841 633 to book a no-cost, obligation-free appointment with an Aware Super financial planner.

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