Gifting While Living: How to Balance Generosity with Long-Term Planning

The recent article A Living Legacy: Gifting and Giving in Financial Standard Private Wealth by Kylie Wright rightly highlights the growing desire among clients to see the impact of their wealth during their lifetime. Whether it’s helping adult children buy a home, supporting a loved one through a health journey, or giving back to causes close to heart, the emotional value of gifting early is undeniable.

But while the heart leads with generosity, the head must follow with careful planning.

Gifting to Family: Beyond the Feel-Good Moment

It’s a beautiful milestone when a client reaches the point where they not only have “enough” for their own lifestyle but surplus to share. Often this results in questions like:

• “Can I help my daughter buy her first home?”
• “Could I pay for my grandson’s education?”
• “What’s the most tax-efficient way to help now instead of through the estate?”

These are great conversations – but they must be paired with structured advice.

1. Liquidity and Sustainability

While Australia doesn’t impose gift tax, large transfers can still have long-term implications on liquidity, especially with rising life expectancies and unpredictable aged care costs. A gifting decision today should be stress-tested through scenario modelling that factors in longevity, inflation, healthcare, and market fluctuations. A paraplanner’s role is to simulate these “what-if” futures – so gifting doesn’t lead to future financial strain.

2. Asset Protection and Structuring

The article rightly notes that gifting to a child can expose that asset to family law risks. One of the most overlooked parts of living gifts is not just whether you can give, but how you give.

• Gifts vs Loans: Structuring a gift as a formal loan with clear documentation (and potentially a caveat on property) can protect assets in the event of divorce or financial mismanagement.
• Discretionary Trusts: Gifting into a trust with a tailored deed and appointor structure can offer both tax flexibility and asset protection, especially if your client wants to retain some control over how the funds are used.

3.Clarity Among Siblings

Gifting during life – particularly to just one child – can create perceived imbalances in the family. Good paraplanning includes supporting advisers with tools that model “equity over time” and help navigate family dynamics. Sometimes this means offset clauses in the will or staged gifts with transparency and documentation.

Philanthropy with Structure: More Than a Tax Deduction

Private ancillary funds (PAFs) and family foundations are powerful vehicles, but they’re not one-size-fits-all. Their setup and ongoing compliance obligations mean they’re best suited to clients with substantial investable assets (typically $1m+ earmarked for philanthropy) and a long-term giving horizon.

For clients not ready to establish a PAF, we often recommend simpler pathways like structured giving through public ancillary funds (PuAFs), named giving programs, or even testamentary gifts through the estate.

Regardless of structure, the most meaningful philanthropy starts with purpose. Why are they giving? What impact do they hope to see? Aligning values with financial reality is where paraplanning shines.

Impacts on Aged Care and Pension Entitlements

One area where people often seek out advice on is the intersection between gifting and government entitlements.

Under the Centrelink rules, gifts above $10,000 per financial year (or $30,000 over five years) are considered “deprived assets” and will still count towards the assets test for five years. This can reduce or eliminate pension eligibility.

Similarly, for clients considering a move into residential aged care, gifting can affect the Means Tested Care Fee and impact cash flow planning.

These scenarios highlight why every act of generosity should be viewed through a strategic lens. The emotional benefits of gifting are real – but so too are the financial consequences if not planned properly.

The Role of the Paraplanner

Paraplanners are often the hidden architects behind these deeply personal decisions. We take the intentions shared between adviser and client and rigorously test them – ensuring those living legacies don’t come at the cost of future stress or inequity.

Our modelling gives advisers the confidence to say, “Yes, you can help your daughter buy that home – and you’ll still be okay.” Or sometimes, “Not just yet – but in 18 months, after these milestones.”

It’s about enabling generosity with clarity.

As the article by Kylie Wright suggests, wealth is not just about accumulation. It’s also about impact. Whether through intergenerational support or community philanthropy, more Australians are asking how their wealth can make a difference now, not just after they’re gone.

Our role, as paraplanners, is to ensure that every gift – whether $50,000 to a child or $500,000 to a cause – is given with foresight, structure, and the security of knowing the future is still accounted for.

Because true generosity, after all, is not just about giving. It’s about giving well.