Funding education: is wealth transfer a good solution?

The award winning wealth management and investment experts Killik & Co have opened a new space on Devonshire Road – House of Killik Chiswick. The Chiswick Calendar is pleased to share their guest blogs on how best to plan and save to acquire the wealth to achieve your goals.

Killik & Co won “Best Discretionary / Advisory Wealth Manager’ in the 2023 FT Investors Chronicle Awards.”

Funding education: is wealth transfer a good solution?

As costs for education continue to increase, transferring wealth between generations can be a good solution for funding school and university fees.

In this article Phil Sole, Relationship Manager at House of Killik Chiswick, shares key points to consider when transferring wealth to fund education.

Building in flexibility

The most important place to start when developing a financial plan is to ensure you have a clear understanding of your circumstances and requirements. You will then need to consider how much flexibility to build into your financial arrangements. For example, the giver should consider:

  • who will require access to the funds (e.g., the parent, grandchild, or both)
  • how often the giver will need to withdraw funds from this wealth
  • any age restrictions on when they can access the funds

Asking these types of questions helps to establish the most suitable strategy to achieve these goals, as the way you manage the wealth, both before and after funds are transferred to the donee, will have implications for how much tax is payable.

Understanding tax implications

Inheritance Tax is often a concern for later life, as tax of 40% is usually payable on estates with a value of over £325,000 at the point when someone dies. Gifts given up to seven years before death may also be taxed at 40%, with a lower rate payable on gifts made earlier in this period, making it mutually beneficial for a donor to make a gift earlier to both reduce the value of their estate and to leave a generous gift for future generations.

In addition to transferring wealth tax-efficiently, families should be careful to ensure this will be received in a tax-efficient way to prevent additional tax being payable as a result of making the gift.

Knowing when to gift

Starting to save as soon as you can is usually the best course of action to achieve your financial goals, however, the tax rules around gifts made in the seven years before death, mean that sometimes it is better to wait for a time before transferring your wealth. It is also necessary to assess whether you can afford to make the gift and sustain enough income in the years that follow, should you need to fund costs for long-term care or other large expenses.

If your family’s circumstances mean you need to review financial arrangements earlier, a more suitable option may be to invest a lump sum with the aim of generating a return or income for when you need it in the future.

More ways we can help with financial planning

Wealth transfer can offer a mutually beneficial and tax-efficient way for a gifter to help fund education. However, you should carefully consider how and when the gift should be made, and we have only provided general guidance in this blog post. The actual impact on your financial arrangements will vary based on individual circumstances, and a financial plan will require regular reviews to respond to changes in expenditure (e.g., increases in school and university fees) and updates to tax legislation.

READ ALSO: Demystifying estate planning

To learn more about how we can help you to save, plan and invest to meet the financial goals you have for your family, please drop into House of Killik Chiswick for a complimentary chat or email chiswick@killik.com.

Please be aware that as with all investments, your capital is at risk and you may not receive back the same amount that you invest. Please note that tax treatments depend on personal circumstances and the rules may be subject to future change.


If you have any questions about this article, or wish to discuss your financial circumstances, please do not hesitate to contact Relationship Manager, Phil Sole and House & Community Coordinator, Emma Walker.

We welcome all Chiswick residents to House of Killik, no appointment necessary.  Pop in for a chat and a coffee at 13 Devonshire Road – we look forward to meeting you soon.


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