Early inheritance is becoming the new normal in Australia. In 2026, the traditional concept of “waiting for the Will” is effectively dead. With property prices locking out young buyers and the cost of living soaring, a massive shift has occurred: parents are choosing to transfer wealth now—when their adult children desperately need it for house deposits and school fees—rather than waiting until they pass away.
The sentiment behind an early inheritance is noble: “I want to see them enjoy it while I am still alive.” This is often called “giving with a warm hand” rather than a cold one.
But financial lawyers and estate planners are sounding the alarm. This rush of generosity is creating a legal minefield that could destroy your retirement savings, impact your Age Pension, and tear your family apart.
The “Gift” That Keeps on Taking
When you transfer $50,000 or $100,000 to your child as an early inheritance, the law generally assumes it is a Gift (unless proven otherwise).
Once that money leaves your account as a gift, you lose all control.
- The Divorce Trap: If your child separates from their partner three years later, that $100,000 is considered a “marital asset.” The Family Court will likely award half of it to the ex-partner. You effectively just gifted your hard-earned savings to your child’s ex. protecting family money from divorce.
- The Bankruptcy Risk: If your child’s business fails, creditors can seize that gifted money.
- The “Granny Flat” Fallout: If you gifted money to build a granny flat on their land without a title, and you fall out, you can be evicted with zero legal recourse. Learn why you need a Granny Flat Agreement to avoid this specific trap.
The Centrelink “Deprivation” Trap
This is the hidden risk that catches most retirees off guard. If you are receiving (or planning to receive) the Age Pension, handing out an early inheritance can be a costly mistake.
Services Australia has strict gifting rules. You can generally only gift:
- $10,000 in one financial year, OR
- $30,000 over five rolling financial years.
If you gift $100,000 to help your daughter buy a house, you have exceeded the limit by $90,000. Centrelink will treat that $90,000 as a “deprived asset.”
- The Consequence: They will count that $90,000 as if it is still in your bank account and deem it to be earning income for the next five years.
- The Result: Your pension payments could be reduced or cut off entirely.
By structuring the transfer as a Loan instead of a gift (using a platform like Chipkie), the asset is still counted, but you retain the right to recall it if you need it for aged care bonds later—a flexibility that a gift destroys forever.
The Sibling Scoreboard: “Where’s Mine?”
Nothing destroys a family Christmas faster than perceived unfairness. If you give Child A $100,000 now for a house deposit, Child B and Child C will naturally wonder: “Is that coming out of their share of the Will?”
Without formal documentation, there is no guarantee that the “early” money will be deducted from the final estate. This often leads to vicious legal battles after you pass away, with siblings suing the estate to “even the score.”
The Solution: The “Forgivable Loan” Strategy
Smart families are bypassing the “gift” entirely. Instead, they are using platforms like Chipkie to structure the early inheritance as a Formal Family Loan.
Here is how the “Forgivable Loan” works:
- It’s a Debt: You transfer the money, but sign a formal loan agreement.
- It’s Protected: Because it is a loan, it is a liability for your child. In a divorce, it must be repaid to you before the asset pool is split. The ex-partner gets nothing of yours.
- It’s Flexible: You can choose to charge 0% interest or “commercial” interest (depending on tax advice).
- The “Warm Hand” Twist: Your Will includes a specific clause that says: “Upon my death, the outstanding balance of the loan to [Child Name] is forgiven and counts towards their share of the estate.”
This structure gives you the best of both worlds: your child gets the money now when they need it, but you retain the legal protection of a lender until the day you die.
Step-by-Step: How to Do It Safely
If you are ready to help your kids, don’t rely on a handshake.
- Discuss the Terms: Is this an advance on their inheritance? Will they pay interest?
- Check Centrelink: Consult a financial planner if you are near pension age.
- Document It: Use Chipkie to create a formal loan agreement. It takes minutes but provides years of protection.
- Update Your Will: Ensure your solicitor knows about the loan so they can draft the “forgiveness” clause correctly.
🛡️ Give Safely with Chipkie
Generosity shouldn’t be a gamble. If you are planning an early inheritance, don’t just transfer the cash and hope for the best. Use Chipkie to create a registered loan agreement that protects your capital from divorce, bankruptcy, and family feuds. Give with a warm hand, but keep a steady grip on the paperwork.
Disclaimer
Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial, legal, or estate planning advice. Estate laws and Centrelink rules are subject to change. We always recommend consulting with a qualified solicitor or financial planner before making any financial decisions.
