If your grandchild is about to start school, you might be reflecting on how you can help them to shape a brighter future. One of the most powerful ways in which you can contribute is to offer your grandchild an investment in their education. Grandparents have a key role to play in nurturing the next generation. Your involvement can make a profound difference – especially when you consider the long-term impact that education can have on a child’s future. Whether it’s a financial contribution, or offering emotional support and guidance, you can create a legacy of learning that can serve as a foundation for your grandchild’s future success.
Why the early years are so crucial
Research shows that the first few years of a child’s development are crucial for laying the groundwork for their future academic, social, and emotional well-being. This is a vital time for brain development, and children are learning physically, behaviourally, cognitively, and socially at a faster pace than any other time in their lives. During this period, neural pathways are formed that will support everything from problem-solving, to emotional regulation.
Many grandparents will offer financial support for higher education, but high-quality early years education is arguably the better place to focus your investment. The early years are key for developing foundational skills including language, communication, and self-regulation. Ensuring that your grandchild has a great educational start will not only prepare them for later academic success, but equip them with the tools to navigate all of life’s challenges.
Herne Hill School, an independent Kindergarten, Pre-School and Pre-Prep in South London is known for its excellence and expertise in preparing young children for life. The largest stand-alone independent school in the country specialising in 2- to 7-year-olds, the School has a large team of expert early years educators as well as state-of-the-art facilities and resources.
Herne Hill School Headteacher Ngaire Telford says: “Studies from around the world confirm that the Early Childhood Education period runs through to the age of 7 – 8 (i.e. until the end of English Key Stage 1) and requires a special pedagogical approach. This stage offers by far the greatest return on investment – not least because longitudinal studies have shown that advances achieved by that age tend to ‘stick’ and last a lifetime. In other words, a child can graduate from Herne Hill School at age 7+, be ahead in all academic and developmental aspects and likely remain ahead in whatever school setting, including many good state school options.”
A holistic approach to education
A holistic approach to education focuses on the whole child. This approach recognises that if you nurture emotional intelligence and well-being, academic achievement will follow. Emotional intelligence (EQ) plays a crucial role in a child’s ability to succeed – not only in school, but throughout their life. In an ever-changing and competitive job market, high EQ is increasingly attractive to employers. EQ is essential for forming strong relationships, resolving conflicts, and maintaining resilience in the face of setbacks.
Schools that offer a holistic education and focus on EQ, enable children to develop a well-rounded approach to life. This is something that traditional education systems, with an emphasis on tests and grades, may not always prioritise. Investing in early years education that nurtures the whole child is key for ensuring a child’s long-term happiness and success.
Ngaire Telford says: “In a world of AI and instantaneous knowledge facts from internet searches, it’s the children’s EQ developed in their early years that will likely set them apart and ensure long-term success and happiness.”
A useful guide to education trusts
If you are considering investing in your grandchild’s education, one of the most straightforward ways is by setting up an education trust. Education trusts offer a tax-efficient way of helping to fund a child’s education, making them a flexible solution for long-term financial planning.
Here’s what you need to know:
- What is an education trust? An education trust is a fund that parents or grandparents can set up to help fund a child’s education. Unlike regular savings accounts, education trusts allow for a tax-free transfer of funds when you make a payment towards your child or grandchild’s education. The fund can be used to contribute to both school and higher education fees.
- How does it work? A trust deed is usually drawn up with a legal expert in conjunction with a financial advisor. You can make contributions over time, or place a lump sum to pay for your child or grandchild’s entire education. The funds will be kept separate from your own estate to ensure that the money is used specifically for educational purposes.
- Tax benefits Education trusts are more tax efficient than paying fees directly as they arise. As payments into an education trust are not considered a gift, they are exempt from inheritance tax (IHT). However, to truly avoid IHT, payments need to be irreversible. If you still benefit from the money, you may be liable to pay Pre-Owned Asset Tax (POAT). The current maximum you can have in an education trust without occurring POAT is £200,000 – assuming you haven’t used up your POAT allowance elsewhere. It’s important to note that educational trusts aren’t exempt from tax. Any income payments paid to the beneficiary will be net of tax. Tax paid can be reclaimed by the child though, using their personal allowance (currently £12,500).
- Flexibility Education trusts are popular for funding higher education, but they can also be directed towards school fees (including early years education), school uniforms, extra-curricular clubs, university tuition fees, and university accommodation. They are a great option if you want to give your grandchild the freedom to pursue their academic passions without financial constraints.
Before setting up an education trust, it’s wise to consult with a financial adviser to ensure that it aligns with your overall estate planning strategy and financial goals.
Another tax efficient way to support your grandchild is to gift them their school fees, which is entirely exempt of IHT as long as you survive for seven years after making the gift. Ngaire Telford says: “If a grandparent pays upfront for their grandchild’s entire Early Childhood Education at Herne Hill School, that costs them around £100,000. For any grandparent in the fortunate situation of being able to afford this, there is possibly no better way to leave a legacy for their grandchild. Furthermore, they are most likely to see the benefits of that generous investment within their lifetime, being part of and witnessing their grandchild developing into a superb, confident young person and acquiring all the skills to then lead a happy and successful life. For anyone interested, Herne Hill School would be able to uphold fees at the current level for an upfront fees/gift payment.”
Building a lifelong legacy of learning
As a grandparent, you have the ability to make a lasting and profound impact on your grandchild’s future. Whether it’s emotional guidance, or you’re in the fortunate position to offer financial support, you can help to ensure that your grandchild has the tools to succeed in all areas of their life. A legacy of learning is one that continues to inspire, long after your grandchild has completed their formal education.
This is a sponsored post created in collaboration with Herne Hill School, a co-ed Pre-Prep and Nursery in South-East London.
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