<p>Many of you know this info already but just in case....I would also add that if you are a beneficiary, not an owner, of a Complex Trust,Irrevocable Trust or a Simple Trust you are not the owner of the trust nor is your social security number used as the primary tax ID ,therefore if you receive income and are taxed on the income, you must declare the income however the corpus or principal is not owned by you, therefore leave the much larger sum out. There's a run on sentence for ya! THE CSS profile may ask for more information regarding the trust. If an attorney is a trustee have the attorney respond. Many of my clients mistakenly list these trusts on the FAFSA and CSS profile and some are into the millions yet the income the student or parent receives is less than $30,000 a year. If you receive a K-1 or 1099 or tax letter from the trustee for the income,then you must list this income but again not the size of the trust. This is a common error along with life insurance that is on the students life and has cash value, yet a grandparent owns the policy. The policy is NOT an asset of the student but rather an asset of the grandparent. If the policy is owned by a parent then in the parent section you may be required to disclose. If you mistakenly listed an asset you do not own or control then amend the FAFSA or notify the financial aid office immediately. In this case you have overstated your EFC..better to be truthful and precise!</p>
<p>Interesting Songman. That is NOT what we were told.</p>
<p>We were told that if you were the beneficiary of a trust, even with no access to the value, you were required to list YOUR share of the value as an asset on the FAFSA. This came from NUMEROUS calls to the FAFSA helpline.</p>
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<p>“Common” mistakes? You’re kidding, right?</p>
<p>I would imagine that most college applicants are not the beneficiaries of complex, irrevocable, or simple trusts. There may be quite a few common FAFSA mistakes, but this probably isn’t one of them. A more specific (and accurate) thread title would have been useful - particularly for those who actually have trusts and could use this info!</p>
<p>dodgersmom- The title came from the Morningstar article- you are correct not everyone is a beneficiary of a trust. More people do own retirement accounts,life Insurance, pension payments and annuities. I just thought I would add the trust info because more people are bene’s of trusts than you would think. They never mention it for fear that people will think they are wealthy when in reality it is NOT their money. The money actually transfers at their death to a charity, college (oddly enough) or to their children and great gandchildren. But only at the death of the parent beneficiary. There are trillions of dollars on deposit in trust accounts in the USA and I am here to tell you that some of the beneficiaries are middle class or lower. yes we manage for the wealthy also and they don;t even bother to fill out a FAFSA. They would never qualify for a cent. Even if their child may qualify for merit aid many refuse and say “we can afford it, let the school give the money to a financially needy student” that’s the truth!</p>
<p>Thumper1- If you have no acesss- truly have no acess and receive income only, then you have no share. The key also is your share includeable in your estate?. 99% of these trusts the share (even if a trustee said it is your share) is NOT includeable in your estate. Therefore YOU DO NOT OWN THE ASSET. Therefore in this case FAFSA is incorrect. Why? Can you withdraw your share and pay for college? I doubt it. So it seems that like many entities in the government that I run into if they don;t understand the nature of the asset they tell you to list it anyway. Some of this problem is caused by the trustee attorney or bank. They create several shares for simple accounting- place your name on the share such as "Trust dtd 03-12-89 FBO Songman McGurk " it so they can manage it easier if you need more income then let’s say your wealthy sister does, In the end if the money goes to a charity or your children at your death or also beingan EXEMPT trust from your estate then you don’t own it. But we are into the weeds now. </p>
<p>Every trust has different trustee powers and provisions but generiaclly speaking exempt and irrevocable means just that. That is why the CSS profile gang often will ask for a copy of the trust. Once they find out that the parent or student does not own the asset they go about their business.</p>
<p>I wish I could make this common mistake. ;)</p>
<p>Hey gang- I also included a link which discusses more common mistakes :-S </p>