early inheritance

Australians are enjoying longer lives, which means many inheritances are arriving in children’s hands too late to help buy a home or start a family. Some parents are now considering an early inheritance by opting to gift part or all of their inheritance while they are still alive. Let’s unpack the key considerations of this big decision!

1. Are you sacrificing your own retirement needs?

Helping your children financially now can kickstart crucial life chapters for them. However, you need to make sure that you aren’t prioritising their needs over your retirement plans. Work with an advisor to crunch the numbers and check that you’ll have enough for a comfortable retirement. Neglecting your future financial security could lead to dependence on your children later in life, and by then it may be too late.

2. Will an early inheritance cause family drama?

While early inheritances can be met with gratitude, family dynamics might complicate things. If you plan to give equal shares to multiple children, consider potential resentment if one is already wealthier. Discuss potential issues with your children and seek advice from legal professionals if needed. Unresolved matters could lead to legal disputes in the future.

3. How does an early inheritance impact Centrelink payments?

If you’re a pensioner, gifting limits apply to avoid affecting Age Pension payments. Inform Centrelink of any gifts during your regular income reporting. This includes non-cash gifts, like paying off a child’s loan or buying them a car. Exceptions exist, so consulting Centrelink beforehand can clarify how gifts impact your pension.

4. Are you feeling pressured?

Evaluate if you feel pressured to provide an early inheritance. Ensure your decision isn’t influenced by the media, pushy behaviour or conditional relationships. While helping your children is admirable, weigh the potential impact on your retirement and family ties. It’s your money, and your choices should align with your wishes.

Is an early inheritance right for you? 

Gifting an early inheritance can be a rewarding exercise, but careful consideration of these factors ensures that your generosity doesn’t impact your own well-being or lead to family complications. Before making a big decision like this one, we always recommend speaking with a financial advisor who will be able to review your unique financial circumstances and help you determine whether an early inheritance is right for you. 

Learn more about APS Financial Planning.

Written by APS Senior Financial Advisor, Paul Hatzigeorgiadis.

Paul has over 25 years of experience in the financial services sector. Over Paul’s history, he has provided advice to an extensive range of clients from wealth accumulators to pre and post retirees advising them on Wealth Creation, Cash Flow Management, maximising Centrelink benefits in Retirement, Personal Insurances, Debt minimisation strategies and Superannuation. Paul is married with an 12-year-old daughter and enjoys spending time with family and friends.  Whether it’s assisting clients to meet their short-term goals or working with them over a longer term, Paul enjoys helping guide his clients with their financial future.