Money for education-gift from grandparents

Lollipop3176

We are planning to transfer our son to a private school asap and my parents have offered to pay the fees up until VIth form. (3 years fees payable either termly or monthly)
We were wondering the best way to transfer and hold the money (preferably earning interest).
Account in his name?
Premium bonds?
Trust fund?
How would possible inheritance tax affect this gift if the worse should happen to my parents?
Any advice or experience greatly appreciated

Lokolo

IHT not sure, gifts are part of the estate (I think). So you have 7 years for it to be counted, so touch wood.

I wouldn't put it in his name.... you know kids nowadays.

I would put it in a savings account which is instant access. You aren't likely to get huge amounts of interest but its better than nothing.

kingmonkey

http://www.moneysavingexpert.com/protect/inheritance-tax-planning-iht

First £3000 each year free of inheritance tax

http://www.moneysavingexpert.com/savings/child-savings-tax-free

Of course your children are likely not to pay tax, depends on the sums of money involved and if they have any other income.

An instant or a notice (since you know when you'll need to pay) savings account would probably be best - given that you need the money in the short term. Return on premium bonds are very poor.

opinions4u

If the grandparents could hold the money as trustees for your child, this would ensure that funds are not taken in to account if you ever require means tested benefits.

If their estate is worth more than £300k (each if married) they should be seeing an IFA to mitigate IHT.

CLAPTON

If your parent pay the fees out of income (and not savings) and pay regularly then it's outside IHT.

If they die and their estate is greater than 2 x312,000 (currrent values) then their estate will be liable to IHT.

If they give money to you now and then die within 7 years their estate will be liable to the same IHT as if they hadn't given you the money.
However if they survive 7 years the the gift will be outside IHT.
So not so bad really is it?

What is their estate worth?
how much are the fees?