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Ask Paul: I have $500k in super, should I give $200k to my kids?

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Dear Paul,

I am living with my daughter and her husband. I have $500,000 in super but no other assets.

I live a comfortable life and have just started receiving the age pension.

ask paul should i give half my super to my kids

I have two children living independently.

Can I give $100,000 to my children to help them now rather than wait until I die? - Bernadette

I like your attitude, Bernadette. Giving money early to the kids is a very personal issue and can have all sorts of family complexity.

The personal issues I will leave to you.

But the absolute rule number one is to ensure you are financially secure. This means thinking through health issues, what happens if you need to go to an aged care service in time to come, with high upfront costs and so on.

It also needs a good think about how much you may need over the aged pension to live well.

Once you have thought over these quite complex issues and are certain that you will be as secure as you can be, then giving money to your kids may make sense, but it is critical we consider the impact on your pension.

Under the "deprivation" rules, when it comes to impacting your pension, you are only allowed to give away $10,000 a year, up to a limit of $30,000 over five years. So, if you give away $100,000, in the first year the pension calculation will still assume you have $90,000 when it comes to calculating your pension.

I would suggest you talk to Centrelink about the impact on your pension. It makes quite a difference whether you are a homeowner, single or joint pensioner and so on.

But I really wonder if, after ensuring you are financially secure, you would not be better to gift $10,000 a year to the kids until you reach the $30,000 limit after three years. At this stage you could reassess your situation.

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Paul Clitheroe AM is the founder of Money and serves as the publication's editorial adviser. One of Australia's most trusted personal finance experts, Paul has spent decades helping Australians build wealth, manage debt and make smarter money decisions. He is widely known for host­ing the Money TV program and authoring best-selling personal finance books. Since launching Money in 1999, he has played a leading role in delivering practical, independent financial guidance to Australians. Paul is chair of InvestSMART Financial Services. He was the founding chair of Ecstra Foundation, a national not-for-profit focused on improving financial wellbeing, from 2018 to 2026, and led the Australian Government's Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. In academia, Paul is chair in financial literacy at Macquarie University, where he is also a Professor in the School of Business and Economics. Ask Paul your money question. Due to volume, Paul cannot respond to questions posted in the comments section.
Comments
Entin Nemeyer
September 1, 2021 7.05pm

So when a person have $500,000 still can receive government pension ??

Please explain

Thanks

Entin

Nicole N
September 3, 2021 4.15pm

She mentions that she lives with her daughter and has no other assets (ie she doesn't own her own home). This is how she qualifies for the pension, I would imagine.

Robin PANKIW
September 3, 2021 6.34pm

Beware! Generosity like this can backfire badly - especially if you do not fully own the roof over your head. What if your daughter's circumstances change e.g. separation, divorce, illness, death, financial disaster? Play the "Devil's Advocate". Look at all the "what ifs". Definitely, check with Centrelink and your tax accountant. Gifting to your relatives could leave you homeless and unable to get the pension (for some time at least). Thinking that your generosity will guarantee reciprocal generosity or guaranteed care in later years may not - with the best will in the world - come to fruition. Talk to an estate planner/solicitor about your best options - and make a will. Good luck.