Enable’s IFAs know that parents naturally want to help their children financially where they can. But how much money should we give to the children is a tricky question. Many want to give their children a good start in life but are equally concerned about making sure that their children have meaningful lives. For many lives of significance have been built from application and effort, parents often worry that financial gifts might spoil this drive. There is undoubtedly a balance to be struck between helping the children and indulging them.
Some recent surveys show that around £5.5 trillion pounds of wealth will be transferred from the baby boomer generation over the next 20-30 years. This means the current generation, so-called Generation Y, born between 1981 and 1995 are often called “snowflakes”. This name implies they are less resilient than previous generations. The fear is that they are being overindulged and have too much of a sense of entitlement.
Bill Gates has said he wants his 3 kids to find their own way and will only give them “a minuscule amount”. Warren Buffett has said that the perfect amount to leave your kids is “enough money so that they would feel they could do anything, but not so much that they could do nothing.” Others have a more severe approach and say that once the children are finished with their education, they are on their own and the bank of mum and dad is closed.
The other side of the coin is that on average most of us are going to be living longer so it is important to ensure that not too much is given away too soon. Parents and grandparents may feel happy to set up their young people financially, but it can compromise their own future financial security by giving away too much. If you want to strike the right balance between reducing inheritance tax liabilities and passing more wealth to their family and doing the best for your family as a whole Enable’s IFAs can talk you through your options.