When Love Isn't Enough

By Ian Byrne, CFP

Most grandparents don't need convincing that education or gaining a trade matters for their grandchildren.

As parents themselves, they also want to see their own adult children flourish and do well in life, and at times even ‘help out’ financially. What they do need — and often don't have — is a safe way to do it. The desire is there. The structure, in many cases, isn't.

The largely unspoken risk most families don’t really want to discuss directly is that a direct cash gift offers virtually no protection if your child's marriage breaks down. Under Australian family law, gifted money can be treated as a contribution to the shared asset pool — meaning funds you intended to help your adult children or assisting with the school fees could end up divided in a divorce settlement with someone you never chose to support.

It's a scenario I've seen play out before and the good news is it's also entirely preventable.

Education bonds are one of the most effective tools available for families in this situation. ‘Education’ is a very broad term including pre-school, primary, secondary, tertiary (Uni), vocational (TAFE & apprenticeships), special education, career enhancing courses, accreditations or even just adult education to gain new skills or knowledge.

They allow you to set funds up but in a protected manner - funds are tied to an ‘educational’ use, you retain meaningful control, and the structure provides real separation from family law exposure that a bank transfer simply doesn't offer.

For higher-income families, the tax treatment adds further appeal.

Australian schooling costs between $85,000 and $289,000 over 13 years, depending on the sector. That's not a small commitment. It deserves more than good intentions protecting it.

If you'd like to explore how to support your grandchildren's future in a way that's both generous and genuinely protected, we'd love to have that conversation.

Please note that this article is general in nature and not personal advice. Please reach out to us for further information or advice.