How do you help your adult children while protecting your own retirement?

01 Decide a total, not a series of amounts

Without a stated total, each request is judged on its own merits and the answer is almost always yes. Eleven reasonable transfers across a decade produce a figure nobody would have agreed to as a single number.

Setting a lifetime total — for each child, and for all of them together — converts an open-ended commitment into a budget. It also makes the allocation between children explicit, which avoids the resentment that unequal ad hoc help produces.

The total should be set against what the plan can lose rather than against what feels generous. The test is whether the household's own position still works if the whole amount goes and nothing comes back.

On the defaults above, the worked example shows 20 years. The portfolio lasts about 32 years without the help and 20 with it.

Source: Plan your retirement income

02 Give from surplus income

Regular gifts out of surplus income are exempt from Inheritance Tax immediately, with no seven-year wait and no monetary limit, provided they form a pattern, come from income rather than capital, and leave you able to maintain your standard of living.

That makes an ongoing monthly contribution the most efficient form of help available, and it is also the form least likely to destabilise the household — the money is income you were not spending rather than capital you were relying on.

The £3,000 annual exemption and £250 small gifts cover the rest, and a larger one-off transfer falls under the seven-year rule with all the uncertainty that carries.

There is a reason to prefer regular help over lump sums beyond the tax. A standing monthly amount is easier for the recipient to plan around than an unpredictable series of larger transfers, and it is easier for the giver to stop — a payment that ends is a smaller event than a refusal of a request.

Source: Inheritance Tax: gifts and exemptions

03 Gift or loan, in writing

A house deposit is the classic case. Lenders usually require a gifted deposit letter confirming that no repayment is expected and that the giver has no interest in the property — so a transfer described within the family as a loan often has to be documented as a gift.

Whichever it is, write it down at the time. Families remember these transfers differently ten years later, and a divorce or a death turns an ambiguity into a dispute. A short signed note costs nothing.

A loan also has consequences the family may not intend: it is an asset of your estate, it may need to be repaid to the estate on your death, and it can complicate a will that treats children equally.

Where a loan is genuinely intended, say what happens to it on your death. Most families never decide whether an outstanding loan is repaid to the estate or written off against that child's share, and the answer determines whether the will treats the children equally in practice or only on paper.

Source: Capital Gains Tax on gifts

04 What not to touch

The guaranteed income floor is not available for this. Money that funds essential spending — the annuity, the pension covering the heating bill — is not surplus, however comfortable the household feels.

Nor is the reserve that covers the tail. Care costs are open-ended in England and housing equity is the reserve of last resort for most households, so giving away the option to release it is a decision with a long shadow.

And a gift made under pressure at a difficult moment is the one most likely to be regretted. Anything above the stated total is worth a month of thought rather than a same-week decision.

Source: Care and support statutory guidance

05 Saying no is part of the plan

A total that is never enforced is not a total. The value of setting one is that it makes a refusal a matter of arithmetic rather than of judgement about a particular request, which is far easier to say and far easier to hear.

It also helps to say the number out loud. Children who know that £40,000 is the figure across their lifetime plan differently from children who do not know there is a figure at all, and the information is usually more useful to them than another £5,000.

The households that manage this well are not the wealthiest ones. They are the ones where the limit was discussed before the first request rather than discovered after the eleventh.

Be prepared for the total to be revisited once. Circumstances change, and a household that set a figure at 60 may reasonably move it at 70. What matters is that it moves as a decision rather than eroding through a series of exceptions, which is the failure mode the total exists to prevent.

Source: MoneyHelper: pensions and retirement