female student hugging parents at graduation
Advice

An expert lesson in educational trusts

Monika Volsing Monika Volsing
2 min read

Whilst you may want to give your children and grandchildren the opportunities available through private education and university, it is an expensive choice yet considered to be a priority by many people. Parents and grandparents are setting up trusts as a way to set aside money for the education of their children and grandchildren.

A word to the wise when setting up an educational trust

With the correct legal advice your educational trust will be set up correctly. You will have chosen your trustees wisely and considered the unforeseen tax consequences.

It is vital that you ensure the money cannot be diverted on your death and is used for the benefit of your children or grandchildren’s education.

Trusts can also have unforeseen tax consequences if not considered correctly. It is quite common for parents or grandparents to transfer investment properties into trusts for their children and grandchildren and create a form of trust, known as a ‘discretionary trust’. However, the transfer of property amounts to a disposal at market value for capital gains tax (CGT) purposes and could potentially result in you having to pay CGT where the property has gone up in value.

Complex lessons to follow about capital gains tax

Although a CGT relief, known as holdover relief, may be available, the relief is subject to certain conditions and exceptions. Furthermore, transferring assets into a trust during your life can result in you having to pay lifetime inheritance tax, if it causes you to go above the inheritance nil rate band taking into account previous gifts made. It should also be noted that as a result of anti-avoidance legislation the income from the trust property can continue to be regarded as income of the parents for income tax purposes.

Educational trusts continue to be a good way of providing for the educational needs of your children and grandchildren; therefore it is wise to obtain expert trust advice when you wish to set up a trust.

Please talk to our specialist solicitor Monika Volsing to discuss setting up an educational trust on 0113 320 5000 or email mkv@winstonsolicitors.co.uk

Client feedback

The whole process of sorting out my wife's estate and a lasting power of atorney was made a relatively easy to understand process because the team we dealt with spoke to us in an easy to understand language. They also acted quickly at every stage as well as always keeping us updated if there were any delays.
David
Fast efficient informative service
Christopher
Many thanks to Monika and staff at Street Lane office for their help and understanding at what was a very sad time for me. So efficient.Ann Campbell
Ann
Monika made the whole Wil process very simple & was more than happy to explain any concerns we had.
Jane
Emily was a very patient and supportive lady, as we were not very clued in to dealing with some of the internet issues and she guided us through it.Emily made altering our wills a breeze, would use this firm Winston solicitors 100 percent for all our business.
Tina
I received a welcoming and efficient service from Monika at Winston’s. A lovely, friendly lady that was very professional at the same time. I would use Winston’s again.
Michelle
Emily clearly explained the process to have an Lasting Powers of Attorney for Property and Finance and Health and Welfare.She communicated with precision giving the client the needed information .I would definitely recommend her .
Rosamund
I was dreading the probate process after my husband sadly died earlier this year. Friends who had been in the same situation warned me it could take months or even years. I didn't even know what it involved, it was a complete mystery to me!Thank good ness for Emily Spencer at Winston solicitors who talked me through the whole process and told me what information I needed to complete the paperwork. Emails and phone queries were answered very promptly and once I'd submitted all the figures the grant of probate was applied for by Emily and was returned within a few weeks, not months! Great result and nothing like the trauma I was anticipating.
Patricia
Contact us