Key Considerations For Grandparents Funding Private School Fees
As we roll into a new school year, it’s not uncommon for grandparents to contribute to their grandchildren’s private school education.
If you are supporting your family by helping fund a grandchild’s private education, before the first term’s school fees are due it’s important to receive professional advice on the best way to contribute towards private school fees. At PrimeWealth your advisor can offer specific guidance based on your unique circumstances, however here’s a quick checklist of the key considerations:
Do the maths
Make sure that you have accounted for all your living expenses allowing you to live comfortably without the need to draw on any retirement savings in a way that is unsustainable.
This will avoid selling investments at a time that may not be optimal, it’s important to ensure that ample funds are accessible when you need them, including a buffer.
Understand the impact on Asset testing
If you are maintaining control of the funds set aside for fees, these will be considered as an asset by Centrelink and could impact any Age pension entitlements.
Understand the gifting rule
If you are transferring funds to one of your children or grandchildren, be aware that the Department of Human Services gifting rule currently allows for a gift up to $10,000 in one financial year and a maximum of $30,000 over five financial years without your pension entitlements being affected.
Get advice on the best structure for investing any funds set aside for school fees. “Education Savings” products can be internally taxed at a corporate tax rate which could be more than holding an investment directly.
If you are no longer around to manage any funds for education purposes, ensure that you have considered this in your estate planning.
Ensuring you maintain control of funds until they are required means you keep the funds in any circumstance that you may not have prepared for such as a child not attending private school or university.
Please contact PrimeWealth for further support and advice, taking into account your unique circumstances and financial goals.