In order to provide you with a baseline to look at the investment you are about to make in your child’s future, we will look at an average of the fees of schools in different Australian states.

Below I have calculated average private schools fees for each state in terms of costs in the 2006 school year. These figures include fees from Year 1 through to year 12—so 13 years of tuition in total. These figures do not include boarding fees.

To calculate these fees, I have chosen a few private schools randomly from each state capital city. They have been chosen only on the basis that they show a cross-section of fees, not for reasons of academic status or religious affiliation.9

These figures are averages, but bear in mind that fees for regional private schools in your state will generally be less than the amounts I have quoted. School fees in the ACT are lower than New South Wales and Victoria, but slightly higher—by approximately 15%—than their counterparts in Queensland and Western Australia. Quite notable also is that fees at many girls schools are slightly lower than those at boys schools.

Estate planning and wills are often overlooked by many professional groups, including solicitors. In simple terms a will is a document which legalises your estate plan. Understanding who gets what and when once you have passed on is critical. Really, it should be where you start with your planning and then work backwards, not the other way around.

Receive advice on what needs to go into an estate plan. If a parent was to sadly pass away, how soon can the family be certain that his or her children will receive the best care in their lives?

When building an estate plan with a financial adviser, ensure you cover off the area of a testamentary trust. A well-drafted testamentary trust provides you with peace of mind that will work through possible unanswered questions for my children’s future should you or your wife die prematurely. Make certain that there are enough assets and, as we mentioned above, make sure you have enough life insurance in place to pay for your children’s education right through to university if that was your plan.

Creating an estate plan is not hard, however you will require a competent adviser to organise your estate plan. Then you will require a solicitor to draw up the wills.

As you can see, estate planning is not just about a will or ensuring your estate keeps paying for school fees, it is the welfare of your family. If you have assets and need to ensure that they land in the right hands at the appropriate time, then draw up an estate plan and will. Make sure you get your will done professionally.

However, if income is kept inside the trust at the end of the financial year, then the fund will be taxed heavily. So you will need to ensure that all income is moved out off the Trust.

As previously mentioned, one real benefit with this strategy is income splitting. You can have many beneficiaries within a trust. This is purely at the discretion of the trustees.
Very important aspect of a trust
Recall from before, that if you leave an asset in the hands of a child, you run the risk of allowing the asset to be in the hands of a child when they turn 18 years of age. In a discretionary trust though, you can be assured that the young teenager does not foolishly spend the funds when he or she turns 18. The trustee has the power to remove or add the beneficiaries as you please.

As first mentioned, this structure serves as a sound asset protection vehicle. It may help to protect your wealth from creditors in the event of bankruptcy.

Where possible, invest any additional cash from work, such as bonuses or an inheritance, straight into the savings plan. Ensure that the income from the investment is being reinvested so that it’s compounding and the franking credits are returned back to the plan so that the income stream is added to the overall saved amount.

If you require a savings calculator see www.infochoice.com.au and look under the banking section. Please note, this calculator gives an indication only. An exact figure requires advice from a financial adviser.

It’s amazing how easy this strategy is, but how many people have not yet this plan into action.

Let’s look at a case study.

Case study 1
Names Mary and Phil Evans live in Melbourne
Number of children They have one daughter, Theresa, who will begin school in 2011
Age Theresa turns 2 at the end of 2007
Total family income per annum $110,000
Employment Phil has his own business and seven employees at his manufacturing plant. Mary is an architect and works from home part-time.
Education strategy The goal is to send her to a private school from kindergarten to Year 12.

Strategy choice Simple savings plan
Current savings set aside for schooling $20,000
Figures supplied by MLC Limited