The conversation about the massive transfer of wealth from baby boomers to the next generation seems to be everywhere. Over the next two decades, New Zealand will see one of the largest intergenerational wealth shifts in its history, and behind the headlines lies a very personal question for many families: Should I start gifting now, or wait until I’m gone?
There’s no one‑size‑fits‑all answer. The right approach depends on your own financial security, your children’s circumstances, and the kind of legacy you want to leave.
What do you need for a comfortable retirement?
Before thinking about how much to give, the real starting point is understanding how much you need.
You’ve worked hard for a long time to build the life you have, and you want your retirement to reflect that. A financial adviser can help you map out what “comfortable” looks like for you, considering your lifestyle, your health needs, your travel plans, and what it will cost over time. When you’re confident your own future is secure it then makes sense to consider gifting.
Understanding how gifting affects residential care subsidies
The rules for residential care subsidies allow for gifts of up to $8000 per year in the 5 years prior to going into care. If you have significant wealth these rules are unlikely to have an impact as you probably won’t be eligible for a residential care subsidy. If you are “comfortable” or have limited assets, then you need to carefully consider how the rules will affect you.
Protecting your children while supporting them
Many parents want to help their children now - especially with housing costs, education, or giving grandchildren a head start. But life happens, and relationships change. A well‑intentioned gift can become relationship property in a breakup unless it’s structured carefully.
This doesn’t mean complicated legal arrangements. The key is to get good legal advice early so your gifting doesn’t create unintended consequences.
Most importantly, talk to your children. Clear, honest conversations about what you’re thinking and why, can prevent misunderstandings and misaligned expectations.
Don’t forget your will
Gifting to your children during your lifetime does have implications for your estate. If one child receives a substantial gift now, you will need to consider how you will balance things later. You don’t have to give your estate to your children equally but if you are making unequal gifts you do need to be fair. Wills that don’t reflect your current intentions can create conflict that’s difficult to resolve after you’re gone.
Updating your will alongside any major gifting decisions keeps everything fair.
Practical ways to support your family
If you decide you can comfortably help your children or grandchildren, there are many ways to do it - some financial, some practical:
- Outright gifts or loans - If it’s a loan versus a gift, record the terms clearly to avoid issues in the future: repayment expectations, interest (if any), and how the funds should be treated in a relationship.
- Help with a home deposit - A small handout can make a big difference - a modest contribution to a deposit for a house can reduce mortgage costs significantly over time.
- Boosting a child’s KiwiSaver - A one‑off $2,500–$5,000 contribution for a young child’s Kiwisaver account, can, due to cumulative interest, grow into a meaningful first‑home deposit. Smaller regular gifts such as birthday or Christmas gifts can add up too, and funds contributed to a Kiwisaver account before a relationship begins are generally protected.
- Loans from a family trust - a loan from the trust to a beneficiary may be a practical option, especially when protecting the distribution of funds is important.
- Education and experiences - Music lessons, tutoring, school trips, or even a family holiday can be treated as personal expenses rather than gifts.
- Other choices - Instead of paying for a wedding, would your child and his/her partner prefer help with a home deposit?
- Support “in kind” - Your skills may be just as valuable as cash – you could help with renovations, make soft furnishings for their home, or make other practical contributions.
In summary
Whether you choose to gift now or later, the most important thing is thoughtful planning. Early, good legal and financial advice will help protect your wellbeing, your assets, and your family relationships. And that could save a lot of heartache and worry.
If you’d like to understand more, please get in touch with our experienced estate planning lawyers who will be happy to help.