How & When to Give Money to Your Adult Children
Rather than leaving wealth to their children in a will, a growing number of Australian parents are choosing not to wait. They're giving it now, typically to help with a property deposit, at a time when getting onto the ladder has never been harder.
The impulse is easy to understand. You've watched your children navigate a property market that looks nothing like the one you entered. You have the means to help. And there's something meaningful about seeing the benefit of your generosity in your lifetime.
But good intentions don't protect you from less-than-optimal outcomes. And the difference between a considered gift and an unconsidered one can be substantial, for both parties.
The question most parents don't ask
The decision to give is usually made emotionally and quickly. How you’ll give is often an afterthought.
Whatever your level of wealth, giving too much, too soon, at the expense of your own retirement security, is a concern worth taking seriously.
For parents with significant assets, the risks are different. Gifting large sums without proper advice can trigger unintended tax consequences, complicate your estate, expose assets to your child's financial risks, and create tension between beneficiaries, often in ways that only surface years later.
What are the risks?
Reports of parents gifting $250,000 to $300,000 to help adult children into property are becoming routine. At that level, the amounts involved warrant the same care you'd apply to any significant financial decision.
A few scenarios that commonly arise are:
CGT on transferred assets
Gifting cash doesn’t trigger a CGT event. But, if you're transferring an asset, shares, an investment property, or a managed fund, the transfer may trigger a capital gains tax event at the point of gift, not at the point of eventual sale. The tax liability lands with you, not with your child. This catches a lot of people out.
It's also worth noting that, at the time of writing, Australia's CGT rules are undergoing proposed changes. The 2026–27 Budget announced the replacement of the existing 50% CGT discount with cost base indexation and a 30% minimum tax on net capital gains, with the changes proposed to take effect from 1 July 2027. Transitional arrangements are intended to limit the impact on assets held before that date, but the legislation has not yet passed Parliament. If you're considering transferring an appreciated asset, getting current advice before you proceed is essential both to understand the immediate tax consequences and to assess how the incoming changes may affect the decision.
The impact on your estate plan
An advance gift to one child, made informally and without documentation, can create friction with other beneficiaries down the line. Even where relationships are strong and intentions are clear, an undocumented gift can complicate probate and generate disputes that could have been avoided entirely.
Your child's financial vulnerabilities
Outright gifts become part of your child's personal asset pool. In the event of a relationship breakdown or insolvency, assets you've gifted may be within reach of their spouse or creditors. Structuring through a trust, or documenting the transfer as a loan, can offer a degree of protection that an outright gift doesn't.
Loan or gift?
One of the most useful questions to ask before giving money to an adult child is whether it should be structured as a loan rather than an outright gift.
A documented loan, with a loan agreement in place, achieves several things.
It records the transaction clearly for estate planning purposes.
It can provide a degree of protection in the event of a relationship breakdown, as courts may treat a documented loan differently from a gift when dividing assets. However, this is not guaranteed, and outcomes depend on the specific circumstances.
It creates a level of accountability that, in the right family dynamic, can support rather than undermine your child's financial habits.
It's worth getting legal advice on how a loan is documented, particularly around repayment terms. A loan that appears to have no genuine expectation of repayment can, in some circumstances, be recharacterised as a gift, which may affect both the estate planning and asset protection outcomes you're trying to achieve.
Alternatively, some families structure contributions through an existing family trust or entity. Whether that makes sense depends on your current structure, your broader estate intentions, and the circumstances of the child receiving the funds. It's worth noting that the 2026–27 Budget has proposed changes that may affect the tax treatment of discretionary trusts from 1 July 2027, so this is an area where current advice is particularly important.
Considering your estate plan
Any significant gift to an adult child should be viewed through the lens of your overall estate plan. Questions worth working through with an advisor before you proceed include:
Does this gift create an imbalance with other beneficiaries, and if so, is that intentional and documented?
Does your will need to be updated to reflect this advance distribution?
If the gift involves an asset rather than cash, what are the CGT implications?
Is there a trust structure or existing entity through which this is better managed?
How does this gift interact with your superannuation and any testamentary trust arrangements?
Taking the time to understand the answers to these questions before you move forward will help ensure that any gift is reflected in your broader estate plan.
Why timing is important
There's also a conversation to be had about when to give. Giving while you're well and engaged means you can see the benefit and how it's used. It also means you can structure the transfer thoughtfully, with your advisers involved, rather than leaving it to executors to manage under pressure.
For parents who are planning a significant future transfer anyway, considering the timing and what can be done now to make the eventual transition smoother is a worthwhile exercise.
Thoughtful gifting
The most effective arrangements are those in which the decision is made with full visibility into the tax implications. The transfer is documented in a way that protects both generations. It's consistent with the broader estate plan, or the estate plan is updated to reflect it. And where other children are involved, the approach is considered, even if the amounts or timing differ.
The families who navigate this well are those who treat the gift as a financial planning decision, not just a parental one.
How we help
At Accounting Heart, we work with clients who are thinking carefully about how their wealth serves their family across generations. Whether you're considering a gift now, planning a future transfer, or simply unsure whether your current structure still reflects your intentions, these are conversations worth having before making a decision.
Get in touch to talk through what a considered approach looks like for your situation.
Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and/or other advice as may be appropriate having regard to their particular circumstances.