Should we ask parents for help paying for private schools for our 5 kids?

S

Salmon24

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We are at a v financially busy time of our lives (3 teens in private school and 2 more to go through). We have saved for years to pay for education but we'll have nothing left for retirement. We are still going on holidays but living frugally where we can. I mind an elderly parent which means I don't work many hours. Fortunately my parent is still in reasonable good health (long may this last) but I am due an inheritance in the far future which wld make our lives a lot easier financially. I'm trying to manage outgoings (savings go to fees) and am wondering should I ask for financial support from my parent now and are their tax implications. Thank you very much.

Details are below
Personal details

Age: 46
Spouse’s/Partner's age: 48

Number and age of children: 5 - 17, 15, 12, 9, 7


Income and expenditure
Annual gross income from employment or profession: 15000
Annual gross income of spouse: 112000

Monthly take-home pay Approx 7000

Type of employment: semi state and self employed

In general are you:
(a) spending more than you earn, or
(b) saving?
Breaking even

Summary of Assets and Liabilities
Family home worth €800k with a €90k mortgage
Cash of €5k
Share portfolio 120k
Defined Contribution pension fund: unsure but spouse pays in every month


Family home mortgage information
Lender AiB 2.8%
Type of interest rate:fixed for another 3 years
Monthly repayment: 580

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes


Buy to let properties
not applicable


Other savings and investments:

Do you have a pension scheme? Spouse does. I don't.

Do you own any investment or other property? No




What specific question do you have or what issues are of concern to you?

We overpaid a lot on our mortgage over the years to bring it to a small amount as school fees (2000 a month for 10 months of the yr - no fees in summer) so we pay out 2600 a month between mortgage and fees on basically 1 salary with a bit extra from me.

We are not saving and need about 20k to do extra repairs to the house in the coming years.

My question is - should I ask for help now when we have a lot of expenses. My parent would be very willing to do this but what are the tax implications?

thank you
 
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You have €120k in shares, a €90k mortgage, and a requirement to spend €20k on something.

Clear the mortgage immediately by selling the shares and use the balance, less tax, to fund the project.

Then focus on pension funding.

It’s crazy to invest in shares unless your mortgage is cleared and you’re maxing out your pension.
 
There is no such thing as "your inheritance" until the person dies, just your likely inheritance.

Two separate issues, tax and relationships.

For tax, you can receive the small gift threshold (€3,000 pa) tax-free as can your partner, as can each of your children (i think, as long as they actually receive it, not you). You can separately receive up to €335,000 in your lifetime from your parents (or anyone else in Group A). Doesn't matter if that is received as gift or as inheritance.

For relationships, do you have siblings? Would they have a view on this gift? Might your parents need this money in the future? Might the gift adversely affect any family relationships? Think carefully about all of these before you ask your parents for a gift.
 
Gordon Gekko said:
You have €120k in shares, a €90k mortgage, and a requirement to spend €20k on something.

Clear the mortgage immediately by selling the shares and use the balance, less tax, to fund the project.

Then focus on pension funding.

It’s crazy to invest in shares unless your mortgage is cleared and you’re maxing out your pension.
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Thank you. We use the 120 - combination of shares/investments as a savings pot as the mortgage is quite low. We don't want to have v little left with only 30k and have other expenses upcoming.
 
If you have 120k in shares, would you not be able to finance the 20k of repairs? Then you have 100k left.
I would agree with the above in terms of the consequences of the request in addition to the short-term financial implications.
As a remark, with a 7k take-home pay, your spouse seems to be contributing very little to his pension.
 
Start with the basic's, a full tax review to ensure you are making proper use of your allowances and ensure that you have claimed for everything you can claim for., health expenses, working from home etc

Secondly, as others have said, clear the mortgage- sell the shares. Then you are debt free and close to having assets worth €1m so not a bad place to be before you are 50. Dont forget to review your insurance once that is done

Then assess what the Spouses pension position is,. hard to give advice on that without more detail. Also have you ever contributed to a pension, has any of you worked in the UK in the past?.

There is no such thing as an early inheritance and if you are gifted money, there may be tax implications. Having said that, gifting your kids for future education may be something to consider but also bear in mind, if your relative has to avail of the Fair Deal Scheme over the next 5 years, those gifts may have implications as well.

Eldest kid is in a position for a summer job as well to start saving etc
 
Salmon24 said:
Thank you. We use the 120 - combination of shares/investments as a savings pot as the mortgage is quite low. We don't want to have v little left with only 30k and have other expenses upcoming.
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what 30k and other expenses? Is this on top of the 20k house repairs?

As others have said, its pretty simple to sell the shares and use the funds to clear the €90k Mortgage, spend €20-30k left on the house. Then you have an extra €580 per month excess cash to start adding to your remaining €5k+ savings/use against other expenses.

Its seems very strange to be considering an early inheritance when you have access to the funds you need sitting there. If things were desperate later then you might have a reason to get some early inheritance money but not now?

IF you don't know what your spouses pension amount is, also hard to clarify that you have nothing left for retirement, not to mention the €900k PPR

50
 
Most gift givers would prefer to see their generosity being enjoyed or having a benefit during their lifetime. Especially for something like school fees, where the alternative is for children to either leave a chosen school or not to be able to go at all.

However it is fraught with difficulty in terms of siblings, leaving your parents potentially short of funds to pay for care etc. But only you will know your own family circumstances eg if you are an only child and it is clear that you will inherit the whole estate etc.

How do you propose to fund the college expenses of the older kids, as that is coming soon? It should be cheaper than the school fees if they can live at home but have you done out a projected cash flow for the next few years?
 
So you want to have your cake and eat it. I think it'd be very cheeky to ask for an early inheritance. You are breaking even and you have large assets.
It's great to have generous relatives if you have a crisis, but unreasonable to ask for money for lifestyle spending.
5 kids in private education is an expensive decision, and before long they'll be starting college. Which could be even more expensive unless they can live at home.....
 
Speaking as a grandparent/father, Joe-Soap and a person who went through the mill for most of my life working hard, paying income tax and all the other taxes, USC, fees, property-tax, etc without question since I first started working and I get approached by one of our family asking for some early "inheritance." I'll be honest and say "Yes" to any request for money-in-advance-of-our-passing. In fact, I'd be quite relieved at such a request, not that I have millions (I haven't). But, I would wish to contribute to my grandchildrens welfare mainly. This is an issue that I will have to man-up to and I intend getting the issue out-of-the-way shortly.

The tax implications don't bother me. We've paid tax on everything we've earned and I see no reason why any sort of liability should be transferred to our offspring. You can draw your own conclusions on this.
 
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Leper said:
Speaking as a grandparent/father, Joe-Soap and a person who went through the mill for most of my life working hard, paying income tax and all the other taxes, USC, fees, property-tax, etc without question since I first started working and I get approached by one of our family asking for some early "inheritance." I'll be honest and say "Yes" to any request for money-in-advance-of-our-passing. In fact, I'd be quite relieved at such a request, not that I have millions (I haven't). But, I would wish to contribute to my grandchildrens welfare mainly.

The tax implications don't bother me. We've paid tax on everything we've earned and I see no reason why any sort of liability should be transferred to our offspring. You can draw your own conclusions on this.
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Thank you
 
misemoi said:
Most gift givers would prefer to see their generosity being enjoyed or having a benefit during their lifetime. Especially for something like school fees, where the alternative is for children to either leave a chosen school or not to be able to go at all.

However it is fraught with difficulty in terms of siblings, leaving your parents potentially short of funds to pay for care etc. But only you will know your own family circumstances eg if you are an only child and it is clear that you will inherit the whole estate etc.

How do you propose to fund the college expenses of the older kids, as that is coming soon? It should be cheaper than the school fees if they can live at home but have you done out a projected cash flow for the next few years?
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Thank you. We will look at reducing expenses somewhat and def get the 17 yr old to get a summer job. The kids are heavily involved in extra curricular activities (which impacts costs) but there is time over the summer.

College should allow them to live at home..when the youngest start secondary I'll increase my hours somewhat too without impacting on other obligations hopefully.
 
Is the main income earner self employed? I understand the feeling of having the cushion given your family situation. Do you have life insurance covering the main earner?

I wouldn't be in a rush to clear the mortgage with the 120k, neither would I have the money invested in shares. This is not a long term investment. If anything, I would prepay the school fees (can you get a discount if you do this?).

First things first, what is your income - expenses? How long will the 120k last if your expenses are greater than your income? Secondly, I would reevaluate the intention to put 5 kids through private school? Is this necessary/realistically feasible? Will your oldest be going to university, there may be scope for them to take on a job in the future to help out (particularly if you are dead set on private school for the others)? If so, I wouldn't assume any meaningful drop in financial support as they go on to third level.

As regards the inheritance, I would potentially broach it as more a request to help out with school fees rather than an inheritance. Perhaps it could be structured in such away as to be gifted to the children (€32k threshold for each grandchild) and any inheritance down the line would be for you - given your low pension coverage. When you say you "mind" your parent, perhaps there would be some recognition that you cannot work as much as you would like, as a result? Are their siblings in the picture, which could create complications? And even if you got the inheritance, if your expenses are not in check, it would quickly be whittled away.
 
Caring for your relative will also potentially reduce their need for external care and possibly nursing home care. That is a wonderful thing if you are able to do so, and by doing this it is a side effect that you are potentially leaving the estate with more wealth.

Imagine the hourly rate that would be paid to do what you do to the level that you do (I imagine you are on call at night, over weekends, during bad weather, bring them to appointments using your own car etc). And also the income you are not earning due to your caring responsibilities. Unfortunately this care can be hard to quantify, so hopefully any other potential beneficiaries can see this in view of any early inheritance you might receive.
 
Itchy said:
Is the main income earner self employed? I understand the feeling of having the cushion given your family situation. Do you have life insurance covering the main earner?

I wouldn't be in a rush to clear the mortgage with the 120k, neither would I have the money invested in shares. This is not a long term investment. If anything, I would prepay the school fees (can you get a discount if you do this?).

First things first, what is your income - expenses? How long will the 120k last if your expenses are greater than your income? Secondly, I would reevaluate the intention to put 5 kids through private school? Is this necessary/realistically feasible? Will your oldest be going to university, there may be scope for them to take on a job in the future to help out (particularly if you are dead set on private school for the others)? If so, I wouldn't assume any meaningful drop in financial support as they go on to third level.

As regards the inheritance, I would potentially broach it as more a request to help out with school fees rather than an inheritance. Perhaps it could be structured in such away as to be gifted to the children (€32k threshold for each grandchild) and any inheritance down the line would be for you - given your low pension coverage. When you say you "mind" your parent, perhaps there would be some recognition that you cannot work as much as you would like, as a result? Are their siblings in the picture, which could create complications? And even if you got the inheritance, if your expenses are not in check, it would quickly be whittled away.
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Thank you. I think I phrased the question poorly. It is really just to help with school fees and some additional extras - eldest 3 currently have braces.

I am very lucky to be able to care for my parent.
 
Salmon24 said:
My question is - should I ask for part of an inheritance now when we have a lot of expenses. My parent would be very willing to do this but what are the tax implications?
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If the grandparent gifted yourself, your husband and your five children €3k each (€21k in total) every year, each such gift would fall under the small gift exemption and would have zero tax consequences.
 
misemoi said:
Caring for your relative will also potentially reduce their need for external care and possibly nursing home care. That is a wonderful thing if you are able to do so, and by doing this it is a side effect that you are potentially leaving the estate with more wealth.

Imagine the hourly rate that would be paid to do what you do to the level that you do (I imagine you are on call at night, over weekends, during bad weather, bring them to appointments using your own car etc). And also the income you are not earning due to your caring responsibilities. Unfortunately this care can be hard to quantify, so hopefully any other potential beneficiaries can see this in view of any early inheritance you might receive.
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Thank you
 
Sarenco said:
If the grandparent gifted yourself, your husband and your five children €3k each (€21k in total) every year, each such gift would fall under the small gift exemption and would have zero tax consequences.
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And if the grandparent is committed to the kids' private education, it wouldn't be that unusual for a grandparents to help out woth school fees.
 
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