“Enough to give them opportunity, but not to induce a sense of complacency,” is how Gavin Oldham, philanthropist and founder of The Share Centre summed it up. Gerald Ratner confessed that it did his children “quite a bit of a good when I was in my wilderness years” following the infamous speech that cost him his job, as their inheritance was no longer assured.
The property tycoon Sir Jack Petchey said his children and grandchildren knew he was a “50:50 man”, explaining: “If they really believe in something and are prepared to raise 50 per cent themselves, then I would consider backing them too.” But the author Lesley Pearse said that beyond help with property and education, she intended to “spend as much as possible”, adding: “If I have to stay in a nursing home, it will be a posh one.”
As you wrangle with this question for yourself, you must determine when and how you intend to pass on wealth to your children. Will you leave a certain sum in trust for your heirs when they turn 18 or will they inherit the bulk of your estate when you die?
Will you choose to invest in the best education money can buy — and perhaps their first home — but then leave them to plough their own financial furrow?
Warren Buffett has it nailed. “A very rich person should leave his kids enough to do anything but not enough to do nothing,” he once said. How much this will be is almost impossible to answer: somebody whose parents are worth £1bn will be used to a different lifestyle from those with £10m to leave to their children.
Sometimes, the answer can be as simple as understanding your children’s character, says Alexandra Ruffel, a private wealth partner at law firm Irwin Mitchell. “You may have a child who’s lovely, but not the sharpest tool in the box when it comes to finances,” she says. “You have to recognise that.”
And at what age are they ready to inherit? Many trust structures will mature on a child’s 18th birthday, but parents should ask themselves if their teenage children will possess sufficient financial maturity at this age.
“It is a concern of a number of our clients,” says Chris Shepard, a partner in the private client tax department at Smith & Williamson, the accountancy and investment management group.