**Lifetime gift** (noun) — A transfer of property made by a person during their lifetime, as distinguished from testamentary gifts that take effect only upon death through a will. Also called an inter vivos gift or gift during life. Lifetime gifts can have estate planning, tax, and legal implications depending on their value, timing, and the recipient.
A lifetime gift is when you give property or money to someone while you're still alive, rather than leaving it to them in your will.
It's the opposite of a testamentary gift. With a testamentary gift, you say in your will "I leave my car to my daughter." She doesn't get it until you die. With a lifetime gift, you just give her the car now. You sign over the title, hand her the keys, and it's done.
Lifetime gifts can be anything of value: money, property, shares, jewelry, or other assets. The key is that the transfer happens while you're alive and you give up ownership completely. You can't give someone your house as a "lifetime gift" but continue living in it rent-free and controlling it—that's not a true gift.
People make lifetime gifts for many reasons: to help family members when they need it most, to see their beneficiaries enjoy the gift, to reduce the size of their taxable estate, or simply because they want to share their wealth now rather than waiting until death.
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Lifetime gifts can be an effective estate planning tool, but they come with considerations you need to understand.
First, tax implications. In Australia, there's generally no gift tax—you can give away your property without paying tax on the transfer. However, capital gains tax might apply if you're gifting assets that have increased in value, and there can be aged care and Centrelink implications if you're receiving or might receive means-tested benefits.
In the UK, gifts made more than seven years before death are generally exempt from inheritance tax, creating an incentive for lifetime giving. In the United States, there are annual gift tax exclusions and lifetime exemptions that make strategic gifting an important part of estate planning.
Second, control and access. Once you make a true lifetime gift, it's gone. You can't change your mind and take it back. If you give your children substantial money and then find yourself needing it for unexpected medical expenses, that's your problem—they don't have to return it. This is why you should never give away assets you might need.
Third, protection from challenges. Lifetime gifts, once properly made and completed, are generally harder to challenge than testamentary gifts. If you want to favor one child over another, making lifetime gifts while you're clearly mentally capable and acting voluntarily is often more secure than relying on your will.
Fourth, asset protection concerns. If you make lifetime gifts while insolvent or to avoid creditor claims, those gifts might be voidable as fraudulent conveyances. And if you make substantial gifts shortly before applying for aged care or government benefits, they might be assessed as depriving yourself of assets and could affect your eligibility or require you to pay more.
Fifth, relationship risks. Lifetime gifts to children can create family tensions, especially if siblings receive different amounts. And if you give assets to a child who later divorces, those assets might become part of the divorce settlement—whereas if you'd kept them until death and left them in your will with proper protections, they might have stayed in the family.
Before making significant lifetime gifts, consider: - Do you have enough left for your own needs? - What are the tax consequences? - Will this affect government benefits or aged care costs? - Are you treating beneficiaries fairly, and are differences defensible? - Could this gift cause family conflict? - Is there a better way to achieve your goals?
For major gifts, get advice from an estate planning lawyer and perhaps a tax professional or financial adviser.
**Related terms:** [Gift](/dictionary/gift), [Inter vivos](/dictionary/inter-vivos-trust), [Estate planning](/dictionary/estate-planning), Testamentary gift
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