The late Dame Anita Roddick was reported to have left her daughters nothing when she died last year. The Body Shop founder died with zero net worth after gifting £51 million to her charitable foundation, but we do not know how much, if anything, she had given to Sam and Justine before her death. Certainly, for many better-off parents it makes more sense to give in life than to leave at death.

When Sir Richard Branson's daughter, Holly, became the mortgage-free owner of a £4.5 million townhouse in Holland Park, West London, last year, she was a high-profile part of a wider trend. As securing finance becomes increasingly difficult for twenty or even thirtysomething adults, their parents and grandparents are stepping in - sometimes with cash for a property, or with a deposit, or in other ways. So if you want to help your children with buying a home, what are your options?

The ideal, says Tony Mudd, of St James's Place, the independent financial adviser (IFA), is to buy a property for your offspring outright if you can afford it. Provided that you live seven years from the date of the purchase, the gift is exempt from inheritance tax (IHT) at 40 per cent.

In some cases, the gift could even bring the remainder of the donor's estate below the £312,000 threshold for payment of the tax. Bear in mind, however, that if you are selling investments or other assets to pay for a property for your child, capital gains tax (CGT) or income tax could be payable. But Mr Mudd says that the IHT benefits will more than compensate.

Note also that insurers can tailor “gift inter vivos” policies to cover children for IHT liability on a gift in case you die within the seven years.

But Dennis Hall, of Yellowtail, another IFA, cautions that having the spare cash to buy a property - the average price in England and Wales is £184,798 - does not mean that you can afford to spend it. He says that anyone considering making a gift on this scale should make a thorough lifetime cashflow analysis - reviewing income and capital, with a margin for error. He adds: “People generally underestimate life expectancy. Inflation, poor investment returns and the likelihood of long-term care mean that people need to tread carefully before making substantial gifts.”

Significantly, Saga predicts that long-term care costs will double over 20 years - rising from £112,312 to £223,476 in 2028 for a four-year stay.

The same careful planning is essential if you decide to gift the property you are living in. This solution can work if you have the resources to buy a new - typically smaller - place for yourself. But if you continue to live in the property, it is classified by the Revenue as a gift “with reservaton of benefit” and subject to full IHT even if you die after the seven-year period, unless your children can prove that you paid a fair market rent.

If gifting a property outright is not within your means, there are other ways to help. The simplest is to give a deposit. This has the same tax implications as the gift of property, but anyone can make IHT-clear gifts of up to £3,000 a year.

Access to a substantial deposit can open mortgage doors where income, for instance, falls short. Melanie Bien, of Savills Private Finance, the mortgage broker, says: “The bigger the deposit, the better the choice of product and lower the rate of interest. Given that money is likely to be tight for first-time buyers, the last thing they want to be doing is paying more than they need to each month.”

At Nationwide, for example, homeowners with a 25 per cent deposit get the cheapest rates, paying 5.74 per cent (base rate plus 0.74 percentage points) on a three-year tracker. Those who have a 5 per cent deposit pay 6.34 per cent - an extra £75 a month on a £150,000 interest-only deal.

Moreover, several big lenders, including Woolwich, Cheltenham & Gloucester and Alliance & Leicester, have recently imposed a minimum deposit of 10 per cent on all new borrowers. David Hollingworth, of London & Country, the mortgage broker, adds that deals allowing a 5 per cent deposit are “thin on the ground”.

An advantage of giving a deposit rather than whole property is that the recipient can still feel some sense of achievement. There is also a reduced risk of a falling out if the home is sold later and less likelihood that friends and family will acccuse parents of spoiling their offspring. Even so, Jackie, a London mother who has helped one of her daughters to buy a flat and intends to help the other, will not give her real name because, she says, there is widespread condemnation of all parents who help their children on to the property ladder.

Jackie bought a flat in Islington in 1999 as a base where her two daughters could live rent-free while at university. She has since given a hefty £100,000 deposit to the elder daughter and will make a matching gift to the younger one when she moves out.

However, Miles Shipside, of Rightmove.co.uk, the property website, says that Jackie did well to buy when she did and cautions against similar purchases if the aim is for a quick resale and profit. “She has benefited from 50 per cent growth in London prices over the past three years. But the market is flatter now and it is unlikely that buyers will see that kind of appreciation in the short term.”

If you would like to gift a deposit but are short of ready money, you could consider downsizing to free up cash or release equity in your home. The latter means either raising a loan with your home as security or selling part of your property while retaining the right to live there. Safe Home Income Plans (Ship), at www.ship-ltd.org, explains the process and has links to the organisation's members, which sign a code of practice. For cash-poor parents, downsizing and equity release may be the only ways to free up capital. However, neither route should be undertaken before a thorough financial review.

Whatever way you secure a deposit for your child, you may want or need to boost your child's borrowing ability - especially if his or her income is low. A guarantor mortgage is one that takes your income into account and where you are liable if your child defaults. Mr Hall says: “These may well be something that we see more of during the credit crunch as lenders look for security.”

If your child cannot get a regular or even a guarantor mortgage, a joint mortgage, where both you and your child are liable, may be the last resort. This puts your assets at risk, however, and has serious CGT repurcussions.

For wealthier parents, an alternative to gifting a home or deposit is to put a property in trust. This gives your children a secure base but allows you to maintain control and prevent a rash sale, for instance. Trusts are liable to IHT of 20 per cent.

However you help, remember that your child should make - or update - a will when he or she comes into property, or any asset. The Law Society has an online guide at LawSociety.org.uk, plus contact details for solicitors across the country.

But is it right?

The question of whether it is right to help your children with large gifts - either in life or as an inheritance - excites strong emotions. This spring the television chef Nigella Lawson issued a statement on her website after reports that she would not help her children had sparked a media storm.

The statement read: “Of course I have no intention of leaving my children destitute and starving - rather, this is a story that came from a comment I made about my belief that you have to work in order to learn the value of money.”

This belief is widespread and accounts for some of the hostility experienced by parents who give their children a leg-up early in life. Those against such gifts point to entrepreneurs who have become extremely successful despite starting with nothing and to those raised in wealth who came to a sticky end. In the latter camp, the 7th Marquess of Bristol served time for drugs offences and blew a £35 million fortune before his death at 44 in 1999.

Others see the handing down of wealth as the natural order. Daniel Finkelstein, comment editor of The Times, called it: “One way that we signal the obligation that the past has to the present and the present has to the future.”

Case Study: £57,000 of equity released

Peter Gosling convinced his 92-year-old mother that equity release with Saga's Equity Release Service would be the best way to help his daughters, Wendy, 26, and Emma, 29. The girls, left, were struggling to buy properties.

“My mother had always said that she wanted each of them to have £20,000,” he says. “This way she stays in her home, but they get the money sooner and she sees them benefit.”

“Before, there was no hope of Wendy buying anything in the immediate future. Her husband is a junior doctor and they have a baby. Now they have their own home. My elder daughter, Emma, had chosen to take on all of the mortgage on their home when she and her husband separated. The repayments were big, so the gift from my mother was an enormous help.”

Mr Gosling says that he and his wife were not helped financially when they first bought in the 1970s. “In those days, if you had a job you could get a mortgage and afford a home. Things are harder now.”

His mother released £57,000 from her £170,000 home. As well as the gifts to her granddaughters, she gave £6,000 to her son, spent £7,000 on replacement windows and put aside £3,000 as an emergency fund. The remaining £1,000 covered Saga's set-up costs.