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

Salmon24 said:
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 part of inheritance 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 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?

thank you
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i think to answer your qn, if you are asking for an early inheritance and its forthcoming, the tax implications are the same as if you inherited the money, i.e. you have a CAT threshold and amounts over that are taxable, the 3k annual small gift exemption has already been mentioned, if they were so minding for example your parents could gift you and your spouse 3k from each of them (12k in total) and 6k to each child (another 30K) not small beans!
 
time to plan said:
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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Thank you
Sue Ellen said:
OP,

The question has been asked a few times if you have siblings but has not been answered. It is important in the overall context of the discussion if you let people have an answer. If you do have siblings what is their view on the arrangement?
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Apologies I thought I had answered. I do not have siblings.
 
Salmon24 said:
Apologies I thought I had answered. I do not have siblings.
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In that case, maximising the annual small gift exemption, as suggested above, might be a helpful estate planning tool, assuming your parent has substantial assets.
 
It's absolutely clear that you should clear your mortgage with your shares.

Look at it like this. If you have €30k in the bank and no mortgage, would you borrow €90k to buy shares? It should be clear that to do so is very risky. So clear your mortgage.

Then have a chat with your parent. Tell them that you are cutting back to pay for private education and are worried about college fees.

They will probably be delighted to be asked.

But be sensitive. I know some very well off older people who think that they can never be rich enough because if they have to pay for a nursing home for 10 years, they will run out of money.

Do not ask for an advance on your inheritance.

You might even ask them for a loan to cover educational costs. They will then probably reply that they would prefer to give you a gift.

But a loan could the the solution if they are worried about running out of money as so many elderly people are.

Brendan
 
Brendan Burgess said:
It's absolutely clear that you should clear your mortgage with your shares.
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Could you explain your rationale here?

88% of family income is from self-employment, where you have no idea how precarious this is? Are they a self employed accountant or a self employed roofer?

They are spending >€7000 per month. You are certain that they should reduce their financial security to <€30k (assuming there will be CGT payable), reducing their monthly outgoings to >€6400. 4 months cover at their current lifestyle, 6 months if they cut back, maybe 8 months if it includes the summer time. They have also identified repairs (not discretionary upgrades) to their house that will be required c. €20k.

Their financial security is contingent on the main income earner (a 48 year old) not losing earning capacity. Perhaps they should clear the mortgage after securing a gift/inheritance of sufficient size. Its premature to assert that its "absolutely clear".
 
Itchy said:
88% of family income is from self-employment, where you have no idea how precarious this is? Are they a self employed accountant or a self employed roofer?
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I agree, the risk of a sudden loss in income depends a lot on the sector.

But it is more efficient to insure against the risk with income protection insurance if available or cash on deposit. A basket of shares is just not a clever way to do this
 
Dr Strangelove said:
I agree, the risk of a sudden loss in income depends a lot on the sector.

But it is more efficient to insure against the risk with income protection insurance if available or cash on deposit. A basket of shares is just not a clever way to do this
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I agree.

Itchy said:
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.
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Hi Salmon24,

Firstly, well done on getting your mortage down to 90k.

You are facing fees in and around 175,000 in the next 10 years. Private School fees remaining are circa 105k, college fees circa 70k

Assumptions:
5 kids going to private school at 5k per annum each
5 kids going to college - 4 year degree at 3k per annum each
5 kids going to college - 1 year post-grad at 5k per annum each

Child 1 Private School Years Remaining = 1
Child 2 Private School Years Remaining = 3
Child 3 Private School Years Remaining = 5
Child 4 Private School Years Remaining = 6
Child 5 Private School Years Remaining = 6

If it was me, I would sell the shares and put the money into an interest-earning savings account to be used for education fees only.

120k puts all the kids through secondary school and the first through college. That will give you enough breathing room to save for college fees for the others. Actually, by the time 120k is spent you should have your mortgage cleared anyway which will greatly help.

In the strictest sense paying off your mortgage is probably the best thing to do, but your issue is a cashflow one for the next10 years.

If and when you inherit, treat it as a bonus.

With an 800k house that's large enough for 5 kids, you could probably downsize longer term which would free up funds for retirement if needs be.

It might seem gut-wrenching to sell the shares, but what better way to replace one investment with the best one of all - education!

Firefly.
 
Firefly said:
Hi Salmon24,

Firstly, well done on getting your mortage down to 90k.

You are facing fees in and around 175,000 in the next 10 years. Private School fees remaining are circa 105k, college fees circa 70k

Assumptions:
5 kids going to private school at 5k per annum each
5 kids going to college - 4 year degree at 3k per annum each
5 kids going to college - 1 year post-grad at 5k per annum each

Child 1 Private School Years Remaining = 1
Child 2 Private School Years Remaining = 3
Child 3 Private School Years Remaining = 5
Child 4 Private School Years Remaining = 6
Child 5 Private School Years Remaining = 6

If it was me, I would sell the shares and put the money into an interest-earning savings account to be used for education fees only.

120k puts all the kids through secondary school and the first through college. That will give you enough breathing room to save for college fees for the others. Actually, by the time 120k is spent you should have your mortgage cleared anyway which will greatly help.

In the strictest sense paying off your mortgage is probably the best thing to do, but your issue is a cashflow one for the next10 years.

If and when you inherit, treat it as a bonus.

With an 800k house that's large enough for 5 kids, you could probably downsize longer term which would free up funds for retirement if needs be.

It might seem gut-wrenching to sell the shares, but what better way to replace one investment with the best one of all - education!

Firefly.
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Thank you. This makes such sense. I really appreciate that.

I know at the end we'll have no cash left but my husband says we'll sell the house and downsize!

My mum has offered to cover the fees of the eldest through the 3k x2 (to me and her) which is already a big help. I phased the topic wrong! Wasn't wanting to clear out her bank acct or sell her house . Was just getting overwhelmed on how to manage what's coming down the line and keep up with expenses.
 
Salmon24 said:
Lender AiB 2.8%
Type of interest rate:fixed for another 3 years
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With a low rate like this, they could put the money on deposit and wouldn't lose that much.

They will be paying about €20k capital over the next 4 years anyway.

So it's not "absolutely clear" that they should pay off the mortgage. They will pay a small premium for having access to cash over the next few years. But maybe that is worth it.

Brendan
 
I expect to be out in the cold here, but, I find you post pretty sad tbh.

Your question here was, should I ask for help from my parents.

Really??

Finically, you are very well off, you want the sun, moon and stars, and, want it paid for from your parents.

In anyone’s language, that’s a massive load of entitlement.

I’m a parent, if one of my kids needed a dig out, I wouldn’t question it, I’d dig as deep as one could. As, that’s what a parent will do on their children requesting financial help, it’s hardwired into us to not see your offspring suffer. I certainly though, wouldn’t look to live your lifestyle only to get the begging bowl out, I’m sorry if that sounds harsh, but that really is , the reality of the situation.

I’ve got 10 years on you, my wife’s parents were very well to do, we lived within our means, did the best we could, never once thinking, let’s tap them for an early dig out in order to fund ours and our children’s lifestyle for the better.

I just don’t get it, I think it takes a certain mentality to go down that road, and sets a train in motion for your kids to adopt the same type of approach in the thinking that, sure, there’s always the bank of mum and dad to rely on.

I wouldn’t, stand on your own two feet, or, four feet to include your other half.
 
Personally, with one main earner and 5 costly children, I would not pay the mortgage fully and limit the accessible funds to 30k. 30k is only 4 months income. My experience: 4 periods of unemployment and even doing very well it took a few weeks to 3/4 months to find a new fit. We also had a serious health scare which could have put the main earner out of work for more than 3 months. I know that I am "due" inheritance in the future but I would have to be in an extremely difficult financial situation to ask. To me, accessible money is a piece of mind and it means that we can face difficulties without too much stress.
 
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Secondary school is a time limited expense, it either happens now or not at all, not like something like home renovations, a holiday or a car that could be postponed. At the time of deciding to send the eldest (and younger kids thereafter) to this school, the financial circumstances might have been different, eg the lower earner could have worked more but now is in a partial caregiver role, limiting their ability to earn and fund this expenditure. So that closes off that door. Kids probably can't earn enough in part time jobs to contribute much towards fees. Maybe no scope for lead earner to increase income either. So the next choices are borrow, spend emergency funds or ask for help from parents. OP is exploring those options by trying to understand the tax implications, as there is a tax implication on the parents avenue.

There is a intricate set of circumstances and nuances to how a parent might help their child, throughout their life. I know that some people keep their wills completely secret, some people dangle an inheritance as a bait to sustain a relationship, some people would give you the shirt off their back if they needed it regardless of the expense. And potentially an elderly person might desire their only grandchildren to have a particular type of education that they can fund and watch their grandchildren benefit from whatever the school offers in their lifetime rather than not at all. Only the OP will know what their dynamic is.
 
I don't feel a sense of entitlement. I did earn more before the eldest started in school. I don't now. I've had to cut down my hours and change my role.

It is good to get different perspectives. The advice here has been very fair and balanced for the most part. I have never asked for help before.

We're looking at the share portfolio and will look at our own expenses (def have to get this under control).

Thank you
 
Salmon24 said:
I don't feel a sense of entitlement. I did earn more before the eldest started in school. I don't now. I've had to cut down my hours and change my role.

It is good to get different perspectives. The advice here has been very fair and balanced for the most part. I have never asked for help before.

We're looking at the share portfolio and will look at our own expenses (def have to get this under control).

Thank you
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Reducing your hours is totally understandable considering you have 5 children. I earned more before children. Actually we are just back in terms of income where we were 15 years ago in the past 4/5 years. However you still have 10/15 years of costs to manage.
 
Premos said:
Personally, with one main earner and 5 costly children, I would not pay the mortgage fully and limit the accessible funds to 30k. 30k is only 4 months income. My experience: 4 periods of unemployment and even doing very well it took a few weeks to 3/4 months to find a new fit. We also had a serious health scare which could have put the main earner out of work for more than 3 months. I know that I am "due" inheritance in the future but I would have to be in an extremely difficult financial situation to ask. To me, accessible money is a piece of mind and it means that we can face difficulties without too much stress.
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This doesn’t really make sense at all. The overarching point is that one shouldn’t borrow to invest or have available cash that exceeds the value of one’s mortgage.

Cash or investments sitting on the sidelines whilst the individual has a mortgage need to be earning 5-7% just to break even.

If my mortgage is, say, €200,000 and I inherit €200,000 tomorrow, I really struggle to envisage a scenario where I shouldn’t just clear the mortgage. People talk about armageddon scenarios, but nobody who’s healthy and has zero debt and zero cash would borrow today on the off chance that disaster strikes tomorrow.

The case that’s the subject of this discussion is so clear-cut it’s silly. The person has €120k in investments, a €90k mortgage, and a need for €20k. Dump the investments, clear the mortgage, sort out the €20k, and crack on.
 
Do you have a monthly budget and are you tracking spending?
Is it absolutely essential to send all the children to the same school?
You mention that you are still taking vacations, this is discretionary spending, can they be paused til you get a handle on things?
How many cars do you have? Can you downsize these?
Why aren't you taking future earnings from your children into account? Is there sone reason that they will be unable to work while in college? Seeing as youve paid for private school, can they just cover college costs either by earning in advance or saving?
Personally I dont believe its fair to push this onto your parents when there are numerous options to look into first. And longer term you really arent doing your children any favours by covering every single cost through college.
 
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