Across Australia, early transfers of wealth from parents and grandparents are becoming more common. Older generations are opting to distribute their money during their lifetime instead of waiting until after their death. This shift in financial behaviour is being driven by rising living costs, growing pressure in the property market and upcoming tax changes that target large superannuation balances.
In the past, inheritances usually occurred after death, but this is changing rapidly. With property prices reaching record highs and financial stress increasing for younger people, retirees are stepping in earlier to offer support. Financial advisers report that parents are helping with home deposits, mortgage repayments and education expenses, as many older Australians are relatively well-off later in life.
Another significant factor is the upcoming Division 296 super tax, which will apply to superannuation balances exceeding $3 million. In response, some families are withdrawing funds from super earlier to better manage their wealth and reduce tax exposure. Financial planners are seeing more clients in their 70s make deliberate decisions to pass on assets while they still have the capacity to oversee the process. They caution that detailed paperwork is essential. Properly maintained wills, trust documents and gift agreements can help avoid future disputes.
This trend towards earlier gifting may also affect pension eligibility. Excessive gifting can influence the income and asset tests used by Centrelink, which may lead to reduced age pension payments. Current Centrelink rules allow retirees to gift $10,000 within a financial year or $30,000 over five years without affecting their pension. Any amount above those thresholds is still counted in means testing, even if the money is no longer in the retiree's possession. Experts encourage retirees to take these rules into account before making large transfers in order to avoid unintended impacts on their entitlements.
The move towards early inheritance reflects wider social changes. Many retirees want to experience the satisfaction of seeing their loved ones benefit while they are still alive. On the other hand, this can place pressure on families to maintain fairness among siblings and manage expectations effectively. Clear communication and well-planned arrangements are considered essential to ensure this generational shift in wealth is conducted in a smooth and balanced manner.
