How do I make sure money is spent on university course?

[Penguinpairs]

My DDad wants to put some money aside for his grandchildren for university, approx £15000 per dgc. He doesn't want to just give it to the dgc at 18 as he feels it's a lot of money at that age and if they spend it he can't replace it. He doesn't want to give it to parents of dgc either for reasons I'm not going to go into. The youngest dgc is 6 so uni is a way off and, as he says himself, he may be dead by then. He ideally wants to lock the money away but then dgc get a payout of 5k at 18 & 19 and then whatever remains for the final year. Ideally he would have some sort of clause that they only get it at these ages if they are at uni, otherwise they can have the lot at 25 for whatever they choose.

Has anyone got any suggestions of something he could set up? Oldest dgc is 13 so uni but closer for them. Thanks!

Sounds like a trust is required to me… that would of course mean deciding who the trustee(s) is/are… they do say trusts are used when there is no “trust”…

Best way is a trust. A solicitor can be the trustee. But the grandchildren can claim it once they become 18.

I had an aunt who left me money in a trust until i was 21 for the same reason that she didnt want me spending it on something stupid. I claimed it at 19.

You can say what to happen but once they turn 18 legally that money is theirs

What if they don't want to go to uni and have other career aspirations?

in canada we have plans that pay out directly to educational institutions and to the young adult if they don't attend by 24 or some such number.
they are called registered educational savings plans and are tax sheltered.
maybe something similar is available in the uk?

Yes, what if they want to go into their own business (start up costs) or learn a trade (start up costs as well)? Uni isn't the be all and end all. One of mine was interested in a profession that didn't incur the huge uni fees of siblings. We offered to buy them tools and a vehicle in the place of uni fees. It's about setting them up with a profession without a pile of debt rather than expecting them to take the path we did.

It is impossible to cover all eventualities for all dgc and as I have said, if they don't go to university then he would like them to have the money at 25. I suppose, but admit I haven't really thought about it, that we (parents) would probably pay for courses/ tools on a loan basis to be repaid when they get the money. It's not the that he feels they must go to university just that at 18 if they don't go they might just blow it all and it can't be replaced. He would be happy to pay towards anything that benefits them but wants to try and plan in case he is no longer around to do that.

Curls that sounds perfect. I will look but fairly certain that we don't have anything like that, which is a shame

Thehornedone yes! That's exactly it. The simple option would be for my DDad to give the money to his dc but he is (rightly) worried that one set of parents will spend it on themselves and he wants it ringfenced for the dgc

One real thank you. I'll look at trusts

If he has that concern then maybe he can just let them all get access when they are 25? They could always use it to pay off student loans they may have at that point.

The main thing is not creating pressure that there is an expectation they go to university or, that if they don't, that other options are lesser. They're not.

This. Just let them take the student loans & repay at 25 (or they may choose to keep the loans & use money for something else). The average student debt is £70k+ so although £15k is nice, it's not life changing. Your dad needs to be careful that he doesn't take the joy/generosity out of the gift by tying it up in red tape & hassle.

Although lovely and very generous, it's really only one years loan so not going to stop them being in debt. Because of the way that the repayment works, it's probably not the best use of the money to use it for fees.
Spilt over 3 years, £15k would certainly make university possible where parental contribution isn't forthcoming or possible.

MrsWimpy that's it really, one set of parents have said that they will not be contributing as at 18 the dc are adults. It's not me or my partner btw so no need to get into a debate about it. My DDad just wants to make sure university is an option should his dgc want to go. Tbh I have been looking at non-uni options as it is so cost prohibitive these days and I can't see much changing even after the election

I do hear what everyone is saying, and he's aware that it's not the be all and end all. He just wants to make sure that the parental contribution is covered, it's really not about pressuring them to go

I think the options are

• your dad keeps the money, invests it appropriately so the value isn't lost with inflation, and gifts it directly to his grandchildren when they are adults. He should also also add this to his will in case he dies before then (however inheritance tax may be due if his estate exceeds the threshold). I think he can ask that a trust be created by his will, he would need to discuss with a solicitor when amending his will
• your dad gifts the money to his children and trusts they will use it appropriately for the grandchildren
• your dad gifts it to his grandchildren now, for example in a junior ISA, and the money becomes the grandchildrens' when they reach 18 to use wisely or waste. It would be wise to discuss this with the children in their teenage years, how the money is intended to be used etc, although no guarantees they will listen!

Creating a discretionary trust now (saying money can be released for university fees/ age 25 etc) wouldn't be worth the fees for the sum involved.