taking early inheritance for schools fees Post Reply

[oranges and lemons]

We are looking at taking the plunge on independent schools in the next month or so but have had to accept that this is something that we cannot do without help.

We can probably stretch to do half of it ourselves but all of it is impossible.

My mother has very kindly offered me my share of her inheritance early. This would absolutely solve the issue but my brothers have questions and I am not sure how I can promise to deliver on them.

Most importantly they are concerned that if my mother needs money for care in later life, then there might not be any inheritance for them but I will have had mine?

The other concern is that the inheritance that I will get will be based quite substantially on current house prices and if they go down I will have had my share based on an increased valuation but they will be left with disproportionally less.

I should add that this is all being done very calmly, they do support the decision if there can be some guarantee that it will all be fair in the end. I am wondering if anyone has taken inheritance 'early' with siblings deferring and if so how you managed to structure it?

Thank you.

[Goldhawk]

How much money are you talking about?

Does your mother have the money to give you the fees monthly from income instead?
Could she give your brothers the same?

[Chestnutpot]

Sorry, but this sounds to me like a recipe for a disaster!
Your Mum was very kind to offer, but unless, as Goldhawk says, she can afford to give the same amount to you and your brothers now, there are lots of factors that could change the situation drastically and for the worse:
- increase in school fees
- reduction of your family income
- your Mum needing care later in life
- your siblings, if they have children, deciding that they would also like to send their children to private schools
- you don’t mention how many children you have or their age, but you might have another one in the future: would you be able to afford private education for all?
- as you said, house prices dropping
With so many factors outside your control I wouldn’t risk your family relationships. You could end up putting your mother in a very difficult situation destroy your relationship with your brothers.
Be grateful to your Mum for her offer, but explore your State school options: there are so many great ones at primary and secondary level!

[Life is beautiful]

I don’t have direct experience in this, but did have an experience of a parent dying and taking advice on estate planning for their spouse. I would recommend you take independent advice on this (or rather, your mother does). There seem to be some options like care annuities that can help you buy a sort of “insurance” policy for future care needs so that this money could be set aside safely. There is also an amount that can be gifted each month out of income, free of IHT. Or your mother could think about setting up trusts for each of you and your siblings. Given that it will be very specific to your situation, I would recommend exploring it as I was amazed how many options there are. Good luck.

[Ames123]

This sounds like a disaster that won’t end well unless your mother is so loaded it won’t make a difference but it sounds like it does… So basically you are all removed as this is a word used by spammer your mothers potential care needs and sibling relationships so children can go to independent schools. This sounds like prioritising something which is, frankly, a luxury over many other factors. What if your brothers also want money for school fees…most people can’t afford school fees!!

[Mum-on-the-grid]

This is a tricky one and we are in a similar situation with my sister. I have two children and she has none. Our grandparents supported our independent school education and now my parents want to do the same for my children, but still treat me and my sister equally.

Highly recommend taking advice from a financial advisor. Grandparents can pay fees directly to the school which has some significant tax advantages for them. Keep a running total of this with your siblings.

Any lump sum given to you could count as a gift for inheritance tax and cause further complications if you’re mum sadly passed away within 7yrs.

It is possible, but we’ve found complete transparency to be the best solution!

[Birchtree]

This sounds as though there are a lot of variables that could go badly wrong. Have you considered looking into state school and spending the money you do have on the “extras” that aren’t always included at state schools, such as music etc. We are so fortunate that our local state schools are excellent. Wishing you the best of luck in the tricky situation.

[ForgottenUsername]

I hardly ever post so have forgotten my username but wanted to respond having been on the sibling end of the stick in this situation.
Firstly it is great that you and your brothers are having a sensible conversation about this. My advice comes from the pov of having in laws who essentially did what your mother is proposing (not for school fees though) and didn’t even think it relevant to discuss with the other children at all. So the fact your family is doing this openly means you hopefully can find a resolution that doesn’t create bad feeling.

One thing I think is important to consider is the reason for independent school. Does your child have particular needs that are not being met or especially unhappy at state school? Or is it largely aspirational?
If the latter I would strongly advise against. Most families wouldn’t want to see member of family in distress however if is essentially a ‘nice to have’ - then where do you draw the line? At some point your siblings might want a nicer car/ house/ holiday than they can afford- does that mean they should get inheritance early?

If your mother can’t afford to do the same for all siblings, then probably shouldn’t do it unless it is an emergency / causing a lot of distress. You don’t know what might happen in the future and if someone needs money for something like health reasons for example - and it is not there due to school fees being paid - can that be handled?

Our situation is that one sibling was given additional money for a house. This was not because they needed it to buy a home at all (in which case we would potentially understand) - it was because they wanted one beyond their current means.
Having come to light after the event we were all told ‘we would have done the same for you’ (as already have bought homes). However the fact is they didn’t do the same for us- largely because we didn’t / and wouldn’t have asked. It sounds like you might be the only girl amongst brothers - is there a chance your relationship with your mother means that she knows more about what is going on with your life than theirs? Potentially you might have ‘asked’ for help in a situation where they wouldn’t have done?
We are now in a situation where if any of us were to ask for the same as that sibling early- parents would have to liquidate assets (probably their home) to fund it. So whereas she (yes is the daughter among sons in our case so might have hit a nerve!) got something that was a ‘nice to have’- we would really need to be talking full on emergency. This would be absolutely fine if was something she ‘needed’. But that wasn’t the case.

Additionally think of the inflation and interest implications.
Obviously what you are lent now will be a different £ in future (which sounds like you have considered) but what about where that money is now. Is it invested?
Again to give our example the money given was making good interest in a property- and would have continued to do so. If we hope that inheritance is a good few years off, that money would have made thousands. Instead it is now with one sibling. Can you account for potential losses of where that money would have been invested?

It is a minefield and one I would only approach with a reason that goes beyond ‘nice to have’.

If you do go for it I would suggest that you will have to make the terms extremely favourable to your brothers to ensure that if anyone misses out from the early payment it is you and not them.
You will be creating the situation where it is almost impossible to divide it evenly - so it is only fair that you take the short stick as it were.

[Lotstots]

Hi,

We have a similar situation with my inlaws to the above ( funding a house beyond the means of one sibling 20 years ago ). It's a mess - it was done as an investment, turned into a loan, and then he lost his job. He can't pay back the loan, and now my inlaws need the other siblings to help fund their day to day living costs, as they are finally retiring in their late 70's. It's caused a significant amount of angst amongst the other siblings. Agree with all the other posters. Be super open, and ensure that everyone is aware. Maybe structure it as a loan, and then you pay back the estate / your parents in the future. Maybe set up a payment plan so that once the kids leave school you keep paying the same amount for a couple of years...

[JamTart]

Are you looking at independent primary schools or secondary schools? 

[NVG]

Knowing what I know now (my daughter left school last summer) about how difficult private school kids are finding getting into top universities I would definitely think twice about sending my kids to independent schools if I were starting out. The Labour Party looks likely to win the next election and they have said they will add VAT to school fees so they will go up quite substantially. Living here you can do loads of sport, music, drama etc outside school. If you can’t afford the fees you are heading for years of worry about upsetting your family, things going wrong etc. Unless your kids are already at a state school and thoroughly miserable I would stick with the state system.

[Jonquil]

In our experience, actual school fees are only the tip of the iceberg. Once you have children at private schools, the expectations of extra costs are enormous, in addition to your children mixing with others who have exotic holidays, live in bigger houses, have expensive birthday parties etc. My now grown up children who were educated at senior school in the private sector now tell us that they felt like the poorest in the class. They both did well but if I had my time again, I’d do state schools.

[CheekychappieMum]

Could you fund your kids' last 2 years so that they did A Levels only at a private school if you (and they) were still convinced that was the right option nearer the time? 

Ultimately it comes down to how much of a dent in your mother´s estate her funding your children´s education would make for the reasons outlined above. If you can ring-fence your siblings' inheritance and your mother´s future care then perhaps it could be worth considering with impartial legal advice. 

With the population living longer than ever we are all in the same position whereby we stand to inherit potentially after the bulk of our biggest outgoings. However, personally I prefer to live within my means than rely on inheritance or advances from my parents unless it really is strictly necessary. 

[Stx]

I don’t usually post but this particular post resonated with me. I’m in my 50s now with 2 grown up children. Both went to state primaries followed by independent day schools. If I had my time again I would have sent them to state secondaries too.
My son and daughter have done well but so have their friends who went to state secondaries, if anything the state kid friends have done better. I sometimes wonder if this was because they were less spoon fed and more hungry or it’s just a coincidence.
Anyway regardless while I could afford the school fees at the time, in hindsight I don’t think they represented good value for money. We have been lucky enough to also help our kids get on the housing ladder too but if your inheritance won’t stretch that far then don’t underestimate how hard it is to get on the housing ladder as a young person even if they earn well.
It’s a really tough decision but it sounds like you are taking on a burden here for yourself and others which might not enrich their lives in the way you might hope.
Good luck with your decisions.