Giving while living: The benefits of gifting your kids their inheritance early

In Australia, the rising cost of living, skyrocketing property prices, and financial pressures on younger generations have many parents reconsidering the traditional idea of leaving an inheritance only after they’ve passed away. Whether it’s helping with a home deposit or supporting them with their studies, giving your inheritance early could make a huge impact on your family’s future.

Why give an inheritance early?

1. Helping with big life milestones If you choose to part with some of your kids’ inheritance early, you could be helping them through major financial hurdles like buying their first home. Property prices in cities like Sydney and Melbourne continue to soar, making it harder than ever for younger generations to get their foot in the door. By gifting part of your inheritance for a house deposit, you could save your kids years of saving and give them a head start on homeownership.
2. Support without strings An early inheritance can also provide financial support at a time when it’s needed most, without the formality and stress of waiting until after your passing. Whether it’s to help pay off student loans, start a business, or with childcare costs, you’ll be there to see how your gift helps without your children getting into unnecessary debt.
3. Reduced complications in your willLet’s face it, planning your will can be complicated, and the larger your estate, the more difficult things can get. By gifting part of your inheritance early, you can simplify the process for your heirs and reduce the likelihood of legal disputes later down the track.

Tax benefits

Good news for Aussie parents – there’s no inheritance tax in Australia . Unlike in some other countries, you can gift significant sums of money to your children without being taxed on the transfer. However, keep in mind that gifting large amounts could affect any government benefits you receive. If you’re unsure, it’s worth chatting with a financial advisor to make sure you’ve considered the impact on your own financial future.

Other ways to give

Gifting an inheritance doesn’t have to be just about money. You can also consider giving valuable assets such as property, investments, or even business shares. For example, if you own an investment property, transferring ownership to your children while you’re still alive can give them an income stream and help build their wealth.

How to gift wisely

Before you start writing cheques, there are a few things to consider. First, make sure your financial situation is secure enough to support both you and your children. Gifting an inheritance should not put your own retirement plans at risk.

Secondly, consider whether a lump sum or a series of smaller, strategic gifts is the best option for your family. Some parents choose to stagger their gifts over several years, allowing their children to get used to managing larger sums of money responsibly.

It is highly recommended that you seek out independent professional advice from a financial advisor, lawyer or accountant if you are considering gifting an early inheritance.