Should you give your children’s inheritance to charity?
Fears of misspent money, bad investments and creating spoiled offspring are causing high-net-worth parents to leave their money to causes other than their own children.


Three quarters of multi-millionnaire parents are worried large inheritances will be bad for their children, so are instead donating large chunks to charity, according to new research.
A study of high-net-worth (HNW) parents with average wealth of more than £3 million in total assets found three out of four believe leaving too big an inheritance can be a curse on their children’s lives.
They are considering ways to avoid what they see as potential problems arising from passing on their wealth – as well as seeking methods to reduce the risk of a substantial inheritance tax bill.
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One solution on the table is charitable giving – more than half (53%) of HNW parents have increased their charitable donations over the past two years, the study by wealth manager Rathbones found.
A surge in income and a desire to contribute to making the world a better place were cited as the top two motivating factors behind their generosity.
Charitable giving is a way for parents to do good and reduce their tax bill – including their inheritance tax (IHT) liability. Loved ones may qualify to pay inheritance tax at a reduced rate of 36% if the deceased leaves at least 10% of their net estate to charity.
Parents' primary concern, however, is not giving money away to avoid inheritance tax but harm reduction. The top worry among wealthy parents about large inheritances is that the money will be poorly invested.
This comes ahead of fears over family disputes or wasteful spending, though more than three fifths (61%) are concerned any money left to children will be used irresponsibly.
In addition, nearly six out of 10 parents say their adult children already have enough money and there are more important uses for their assets.
Gemma Gooch, head of charities distribution at Rathbones, said: “Our analysis shows many wealthy parents, already concerned about inheritance tax, fear the impact of too big an inheritance on their children’s aspirations and drive.
“It is therefore no surprise that more are increasingly turning their attention to charitable giving.”
What is a major problem with inheritance?
Strings-attached inheritances are also a serious consideration for HNW parents. Nearly two-thirds (65%) say they would make access to assets conditional on achievements, such as qualifications.
More faith seems to be being placed in generations younger than the Gen X and Millennial children of the Baby Boomers, who are poised to be the largest source of inheritances in the coming years. As many as one in eight (13%) HNW parents plan to leave money directly to grandchildren, with another 26% considering it.
More than half (52%) of those skipping a generation cite concerns their children would misuse the funds, while 41% are motivated by tax efficiency. A quarter (26%) worry about divorce risks, and 13% admit strained relationships with their adult children.
Olly Cheng, financial planning director at Rathbones, said: “We’re seeing more clients aiming to strike a balance between reducing their IHT burden, supporting good causes, and leaving an inheritance that doesn’t dampen their children’s ambition.
“For those concerned about the latter, contributing up to £2,880 a year into a child’s pension – topped up to £3,600 with tax relief – could be a good option. The funds remain locked until retirement (age 55, rising to 57 from 2028), allowing decades of tax-free growth.”
For those wanting more control over how and when wealth is passed on, a trust could be worth considering. Trusts can stagger access to funds, reducing the risks of sudden wealth undermining ambition.
“While more about control than tax efficiency, they remain a valuable option – especially for blended families. Professional advice is essential to find the right solution,” said Cheng.
What are the benefits of leaving money to charity?
With nil-rate bands frozen and pensions set to be included in estates from April 2027, more families face rising IHT bills. Inheritance tax receipts are already rising.
Incorporating charitable giving into financial planning allows parents to create a meaningful legacy, support causes close to their heart and potentially pass on a greater share of their estate to their chosen beneficiaries, rather than the taxman.
Your donation will be taken off the value of your estate before inheritance tax is calculated, and the people you leave behind may qualify to pay inheritance tax at a reduced rate of 36% versus the standard rate of 40% on anything above the nil rate threshold.
For donations made during one’s lifetime, Gift Aid also boosts the value of donations by 25%, while higher-rate taxpayers can reclaim additional tax relief through their self-assessment.
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Laura Miller is an experienced financial and business journalist. Formerly on staff at the Daily Telegraph, her freelance work now appears in the money pages of all the national newspapers. She endeavours to make money issues easy to understand for everyone, and to do justice to the people who regularly trust her to tell their stories. She lives by the sea in Aberystwyth. You can find her tweeting @thatlaurawrites
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