More than two in five adults say they intend to make significant lifetime gifts to their families, according to research by Charles Stanley.
Some simply want to save inheritance tax, often to the potential detriment of their own financial security.
For others, trying to mitigate inheritance tax is a low priority and they get a lot of pleasure out of giving during their lifetime and want to be able to see the tangible benefits to their families.
John Porteous, group head of distribution at Charles Stanley says: “There is however, a natural tension for parents between the tough and tender approaches to their children.
“They want their children to be independent, hard-working and able to achieve success on their own, yet, at the same time, they also feel the need to provide a safety net and help them out.
"This is where advisers can help clients make that decision, raising issues like: what the beneficiaries need and how the cash might affect them, the best ways to make the gift or possibly loan, how to be fair/equitable to all the family and how much they can afford to part with and when."
From a tax point of view there are several pitfalls, not least that if they die within seven years of the gift it will be included in their estate and may incur an inheritance tax liability for all beneficiaries as per the will without them all receiving the benefit of the gift.
Everyone is able to give up to £3,000 per year without it being brought into the inheritance tax net should they die within seven years.
If they have not used this allowance in the previous year, they can bring that forward making it £6,000 and two parents can use both allowances meaning that potentially they can gift £12,000 to a child for a deposit.
Given the average house price and the scarcity of 95 per cent or 100 per cent mortgages, this is unlikely to be enough. If parents are making gifts over this allowance, they will be treated as ‘potentially exempt transfers’ which means that if they die within seven years, the gifts are brought back into the inheritance tax calculation.
"A tricky tax to pay for offspring that used all the money to buy a house," says Emma Watson, head of financial planning at Rathbone Investment Management. "Parents gifting to multiple children may need to consider the order that gifts are made in to ensure equal tax treatment should they die within seven years."
Additionally if, after having gifted, the parent becomes reliant on means-tested benefits in any manner, but particularly care costs, the funds will be counted as remaining within the estate and it will be expected that those funds are available for care costs.