Grandparents paying school fees/siblings

[flipflopping]

Full disclosure- this isn't my situation but a friend's. I would love to hear people's views though.

My friend is a pensioner and a widow. She has two daughters, one of whom has two daughters of their own (ie my friend's grandchildren).

Daughter 1 has asked my friend whether she would be able to contribute towards the girls' school fees if they went private. Friend would be happy to do so and has offered to pay £10k a year.

Daughter 2 has no children and is unlikely to have any (through choise). She hasn't asked for any money.

My friend is fretting that it's unfair for her to be giving all this money to Daughter 1 and none to Daughter 2. She wonders whether she ought to be giving Daughter 2 £10k a year as well (she could afford to do this but it would mean tightening her belt).

The options would seem to be-

• give the money to D1, nothing to D2.
• give the money to D1, nothing to D2 but change her will to give a greater share to D2 when she dies.
• give both Ds £10k

Or something else? WWYD? If it makes any difference, it's all very amicable and nobody has complained or acted as if they're entitled to my friend's money.

I think DD2 should get something. While the money is for the DGC’s schooling, that’s still to the benefit of their parents as presumably DD1 would have to pay the full amount otherwise. If she can’t afford to give the same amount to both (and she should feel under no obligation to tighten her belt to do so, it’s her money!) they should both get the same smaller amount IMO.

That’s lovely @PuzzledObserver. I’m not grabby or entitled but I’d bloody draw the line well before my hypothetical sibling getting £185k more than me!

I have children in private school, primary and secondary. We've always paid this out of our salaries which, luckily, went up apace to compensate for the large jump in cost for senior school and to just about manage when all children were at senior school (which is massively more than 2 x 10K per year). there is also the associated costs of uniform, trips etc.

Over the years I have seen many people get in a pickle with this - grandparents paying the school fees for 2 children at private primary school but then can't or won't cover all the much larger costs for senior schools. Causing a lot of angst for the parents who have a) never had to really fork out for their child's education and b) really don't want to consider moving to the state school system halfway through - though I've seen many who have had to and c) maybe don't both work at this point which is pretty essential for 40K per year on school fess after tax, unless one is in a really high-earning job (in which case why would he be expecting Granny to pay?)

If 20K per year would be a stretch then presumably this kind lady couldn't stretch to 40k per year (minimum) for secondary school. There's also the possibility of a third child maybe? of the other daughter having unexpected children? Upshot for me is that, really, unless the parents can afford to pay for private school for their own children, only doing it if a grandparent pays all or part is a dodgy strategy and really they shouldn't be going down the private route, because they can't afford it (unless the grandparents are very wealthy of course but that doesn't seem to be the case here).

Sorry but if daughter 1 can't afford private school fees without help from her mum then she shouldn't be contemplating sensing her children to one.

2 issues here in my mind:

1. What happens if your friend passes away during the schooling of the GC? Do the siblings get a 50/50 inheritance, or is the cost of schooling minused off and then inheritance split 50/50. This would need to be very clearly stipulated in her will. Plus, if it's a straight 50/50 split in death, surely it should be in life too?

1. What if child 2 goes on to have DC, shouldn't granny contribute to their schooling too? And again what if 1 set of GC have been through private education on granny's money, but then granny dies. Does the cost of private education for any potential future GC get taken out of her estate prior to the 50/50 split to the siblings?

Presumably the DCs have two parents. That means two incomes, unless DD1 doesn't plan to work. If she doesn't, but still wants private school, then she should.

£10k a year over the course of the DCs education adds up to a lot. There may not be enough left to equalise things in the will. ( Which may need to go up as fees go up.) Over time I think it could lead to a lot of resentment. I'd suggest £5k towards school fees and £5k to DD2. The GM was asked to contribute, well that's still a significant contribution.

Does it make a difference why they're thinking of a private school? If there are SEN reasons, or if the only other options are really problematic (according to eg ofsted) then that's a bit different from if she just fancies a fancier educational for them. To each according to their need, and all that.

The only fair way is to equally gift money to both siblings.

Forget that it's for school fees cheeky grasping fuckers (CGFs) for asking/begging for a handout in the first place, it's just a request for money regardless of the purpose.

If DD1 is getting £100k then DD2 gets £100k as well.

Anything else is putting value on one sibling's life choices - or even reproductive health(!) - over the other's.

I'm sure that the grandparent will be gifting handsomely to the grandchildren separately - and absolutely no issue with that, anyone would do it if they could - but favouritism to one sibling, at the level of school fees, is absolutely out of order if the grandmother values her family's feelings.

I'm D2 in this one. I'd be more than happy for my DM to fund my DNs education - more than happy. But the very least they can all do is ask me what I think.

I'd expect 150k to be lurking in the event of a major emergency too.

The more money you can give away before inheritance tax hits, the better. It's an avoidable tax, and it's 40%.

I think she should give £10k to both

Seems really unfair to pay for private schools for one child's children (which are a lifestyle choice) and not pay for a lifestyle choice for the other child.

I don't think the 'even it up on death' thing works as there might not be much left then depending how much care home care ends up being needed. Also, better to get the benefit of it now, not in [x] years time.

So if £10, 000 pa to each daughter would mean tightening her belt then perhaps that's not the best option?

Surely neither daughter would want that?

I can't help thinking that she should say no.

Maybe offer to buy uniform/sports kit of something like that?

A one off rather than financially obligated to the next few year?

£5k each per year. I disagree with accounting for the difference in the will (worth less due to inflation and indeed, may not even come to pass in all likelihood). I would rather have money now if that was offered than potential same lump sum in 20yrs’ time. Invested, it would be worth a lot more. A lot can change in 20 yrs including changes of fortune.

"But the very least they can all do is ask me what I think."

You think that your mum should consult you about what she does with her money?

And £10k a year is HUGE! That would pay my mortgage or 5 months.

@Bluedeblue

In DD2 situation, I wouldn't be happy if my parent did this. It is eroding her inheritance, meaning that in a roundabout way, DD2 is effectively subsidising DD1's children's schooling.

You don't say how many years of school are left, but if it's say 10 years, that's £100k, which means DD2 loses £50k of her inheritance.

I know on MN you're not supposed to mention inheritance, but honestly, I would be annoyed.

So for me, your friend either gives DD2 £10k a year also, or she makes provision in her will to even up the score on her death. Of course this only works if the estate will be large enough to do so.

And it doesn't even matter whether or not you would be right to be annoyed.... the fact is you would be, it could harm the relationship with your sibling, and your job as parents is, first and foremost, to do your best to ensure that you don;t cause your kids to fall out with each other.

I think fair doesn't mean equal.

Clearly each adult child has different needs, and it's fine to not give everyone exactly the same.

My parents are helping my brother with a house deposit. They didn't help me as I didn't need it, but I know they would help if I did. I don't for a second resent them helping my brother, and I wouldn't expect a similar sum. Its their money to share (or not) as they want to.

In this case I think it's fair to pay for a chunk of the school fees. If your friend was really concerned she could remedy the disparity in her will for the future.

You said ‘if they go private’ so it’s not about keeping the DC at the school they already attend. It’s a positive choice to send the children to a private school which, presumably, their parents couldn’t do without help.

I think changing her will to leave her DD2 a higher % sounds like a good idea but there’s no guarantee how much money will be left if your friend ends up having to pay for her care. Also, if she doesn’t end up paying for care and owns a property then the extra % share may disproportionately benefit her DD2. £10k a year for 7-14 years is a lot of money but if your friend were to die in the next couple of years (sorry, but you need to think about this when writing wills) then her DD1 would have received £10-20k and her DD2 would have an eg extra 20% of the estate which may be worth many times that amount.

There are also inheritance tax implications.

’There is an exception to the seven-year rule. You can make regular gifts with no monetary limit as long as you can afford them and they’re made out of surplus income and not your capital. These payments are exempt from inheritance tax. They can be for anything, but school fees are a good example of something which could constitute a regular payment. Rachel McEleney, associate tax director at Deloitte, says: “The gifts must form part of a normal pattern of expenditure and the giver must have enough income left over after the gifts to maintain his or her usual standard of living. In this way, the payment of school fees can be exempt from inheritance tax, without the need to survive seven years.”
However, be warned, says McEleney, “a one-off payment of school fees would not qualify, as it is not part of a pattern, but regular payments over a number of years should normally be exempt provided they are made out of surplus income”.

www.thetimes.co.uk/money-mentor/answer/school-fees-inheritance-tax/

So if your friend can pay the fees out of her income and doesn’t tighten her belt by trying to match the money with gifts to her DD2 then she’ll avoid the situation where her DD1 could be liable for inheritance tax on £7/10k of each annual gift (if your friend dies within 7 years of each gift.) If she gifts out of her capital it’s liable to be taxed.

I’d say she needs to talk to both daughters separately and see a financial advisor about the best way to do this.

Will they ring-fence or better still invest the full amount for primary and secondary ie, 14 years' worth? Otherwise what happens when circumstances change? Morally they might choose to even out setting aside the same for dd2 but no obligation.

@flipflopping

Full disclosure- this isn't my situation but a friend's. I would love to hear people's views though.

My friend is a pensioner and a widow. She has two daughters, one of whom has two daughters of their own (ie my friend's grandchildren).

Daughter 1 has asked my friend whether she would be able to contribute towards the girls' school fees if they went private. Friend would be happy to do so and has offered to pay £10k a year.

Daughter 2 has no children and is unlikely to have any (through choise). She hasn't asked for any money.

My friend is fretting that it's unfair for her to be giving all this money to Daughter 1 and none to Daughter 2. She wonders whether she ought to be giving Daughter 2 £10k a year as well (she could afford to do this but it would mean tightening her belt).

The options would seem to be-

• give the money to D1, nothing to D2.
• give the money to D1, nothing to D2 but change her will to give a greater share to D2 when she dies.
• give both Ds £10k

Or something else? WWYD? If it makes any difference, it's all very amicable and nobody has complained or acted as if they're entitled to my friend's money.

Give each daughter the same amount each year to spend on whatever they wish, ie school fees, holiday, mortgage etc.

I had a similar issue because my siblings had children and I didn't so my parents forked out for grandchildren's school fees which indirectly benefited my siblings, and I didn't get anything as I had no kids.

So I think each child should get the same amount to spend on their family however they see fit.

I think it depends on the family, out of my dads 7 siblings one was given enough money to buy a house because she had escaped a violent marriage and was in need while the others were all settled and although not especially well off didn’t need the money, but it was discussed amongst all of them and they were really open about it, whereas on my mums side my grandparents always split everything exactly equally between my mum and her brother even though her brother hasn’t got any children and didn’t need the money, he just put it in a savings account and gave some to me when I was buying my fist house, which was really nice of him.

I think fair doesn't mean equal. Clearly each adult child has different needs, and it's fine to not give everyone exactly the same

Yep, this sums up my pov.

I would see the money as a gift to the grandchild rather than the parent as it’s the child who benefits .

I would have an issue with my parents doing this for nieces / nephews

The overall estate must be split equally between both daughters so that upon death both daughters receive an equal amount. DD1 receives some of her inheritance early to pay school fees which needs to be wrapped up in a trust for the purpose and noted in the will.

I'm not sure at what point unfairness creeps in, a one off gift of 10k for something benefitting the grandkids feels just about acceptable to me. 140k (10k x 14 years of schooling) is a whole different ball game.

@gardenworks666

I'm curious about why you feel should it be equal?

Also, do you genuinely feel resentful that your parents helped pay for your nephews/nieces' education?

My view would be that different siblings have different needs. I feel that it's fair that your parents spend their money on their children in different ways.

Also, it's their money to spend as they wish, there isn't a requirement to give anything to anyone, or to give equally.