It says “Remarried parents should separate their income and assets from the applicant’s step-parent’s income and assets. For assets where a clear separation isn’t obvious, please halve the value of these assets and include this value” under remarried, does this mean if your parents are divorced that your step parents net worth doesn’t get included?
https://college.harvard.edu/financial-aid/net-price-calculator
It certainly looks like that but seems to contradicted by the FAQ:
https://college.harvard.edu/frequently-asked-questions
Call or send an E-Mail and ask.
No, it means to list Father and Stepmother’s income and assets separately. “Father makes $100k, has $50k in assets” “Stepmother makes $600k, has $500k in assets” The assets might be in a joint account with $550k in it, but in this case the F and Step know who owns the assets. If they do not know or the assets can’t be easily divided, assign half the value to Father and half to Step (so each ‘owns’ $275 of this $550k asset).
You would do the same for Mother and Stepfather. You may have 4 parents you are listing income and assets for.
^^ Yes, this must be it. They have to do this in order to give a heavier weight/consideration to the financial situation of your real parents.
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Father makes $100k, has $50k in assets" “Stepmother makes $600k, has $500k in assets” The assets might be in a joint account with $550k in it, but in this case the F and Step know who owns the assets. If they do not know or the assets can’t be easily divided, assign half the value to Father and half to Step (so each ‘owns’ $275 of this $550k asset).
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Somehow, I don’t think it’s going to fly to have a “joint account” and claim that a much larger portion is “owned” by the step parent. In many states, if not all states, once you mingle money in an account, it becomes a marital asset… I doubt H is going to be ok with money being in one account and the family claiming that a huge share is really only the step’s money.
Of course, there could be some game-playing where blended families will put large assets into an acct with only a step’s name on it in order to make H think that the bio parent has few assets.
Maybe a better question to ask is something like: Have the remarried parents been married less than X years. If so, please provide documentation. …at least then H would be less likely to consider the step’s income/assets.
That said, H needs to reword their instructions because many are going to think that H is only asking for bio parents info.
i think that they want to look at how much the natural parent is benefitting from the marriage. At this scenario, step parent makes 6x as much as natural parent and has 5x the assets. because there are going to be some shared bills, I think that dad would be assessed a minimum 25/30k based on his income/assets vs an automatic full pay when they look at family income of 700k. While they may not necessarily be looking at a contribution from the step parent, they will look at the overall strength of the family finances for bio parent to pay.
In this situation, Harvard states:
so dad would be assessed have 250k
Unless there is something like a prenup…
@sybbie719 I agree.
We often see posts complaining that the $50k income bio parent shouldn’t have to include the $100k stepparent on the FA forms, but the truth is, the $50k parent isn’t paying for all the household expenses like a single parent would be.
My figures were just an example. The instructions said to halve the assets that can’t be otherwise divided.
Joint assets aren’t always shared. It is very possible for two people to own a house and one own 90%, especially since it involves a second (or third?) marriage, with children on at least one side but maybe both. For example, if one party owned the house at the time of marriage, the other would only own half the increase in value since the marriage in a community property state, maybe less in the other ‘equity’ states. It is absolutely possible to show that a bank account is lopsided - if one party contributes $1000 per week and the other $10; if one has only been a party to that account for a year and the other for 30 years…
But it doesn’t matter. Harvard wants the parties to divide the assets if possible, and if not possible to list half the value. If it wasn’t possible for the assets in an account to be anything other than equally owned, Harvard wouldn’t ask the question. It is a lot more common than one might think for spouses to own their own properties and accounts, especially for second marriages when those marriages were started with very lopsided portfolios.
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It is absolutely possible to show that a bank account is lopsided - if one party contributes $1000 per week and the other $10; if one has only been a party to that account for a year and the other for 30 years…
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That is risky business. If the weekly contributions are from earned income during the marriage, then many states, if not all states, will NOT look at those dollars has “his” and “hers”…those states will look at that account as equally owned by both spouses. If a spouse came into the marriage with $XXXXX and wants to preserve that, he/she and/or spouse should never contribute “marital earnings” into that account.
In many families, only one spouse is the earner, and therefore the only one contributing to a savings acct. Yet, that account is going to be considered to be a joint asset. I’d like to see a spouse claim that the savings acct that was built during the marriage from only his (or hers) earned income, is only his (or hers). My H retired last year. His 401k is only from his earnings, but it sure isn’t only his. lol It is half mine. His pension is half mine as well.
Homes are different than savings accts. It’s easy just to open a new acct for joint money. That’s not the case for homes. Yes, a spouse can own home, and then marry, and then the increase in values can be shared.
Anyone coming into a marriage with savings/investments (or later getting an inheritance), really should keep those dollars cleanly separated.
I doubt that H is going to do forensics to see who contributed what over a period of years. As their instructions state, when a clear separation isn’t obvious (like an inheritance that’s been cleanly kept in a sep acct), the dollars should be split.
I agree with you that good planning makes it easier to keep assets separate, and I think Harvard is assuming that for second marriages, which might be recent, the parents have done that and that’s why Harvard instructs that the assets be listed separately if possible. However, it is not required to do things the easy way and many people insist on doing them the hard way!
I disagree that all earnings and assets in a marriage or that come into a marriage are joint. I think there are 9 community property states. In those, it is a little clearer how to deal with earned income, but assets include things other than earned income and even income can include payments from sources that were pre-marriage. In the other states, there can be a lot of different considerations including obligations of one spouse (debt, child support, IRS payments) that make the earnings not marital property from the get go. All kinds of different situations. One spouse might be getting funds from a family trust, they might file separate tax returns for medical expense reasons, they might live in different states and have different tax obligations, they might be getting child support payments that are deposited into a joint account but that are not marital property.
Harvard recognizes this and asked the family to separate if possible. If not, or the family doesn’t want to have the assets considered as separate, then they can just divide things in half. Harvard is giving the applicant the opportunity to show that the money all really belongs to a stepparent, or exactly where it came from. I don’t think they are going to question the division, and of course Harvard is free to just ignore the division. It is certainly within its province to just say ‘Nope, there is plenty of money among these 4 parents, so FA denied’ but why would they ask for assets to be separated if they are just going to lump it all together again? It appears that over the years H has learned that all is not even in a second marriage, that the stepparents are not always willing to fork over $60 grand a year for the child who has just joined his/her household last year.
If Harvard didn’t recognize the issue of stepparent money, it wouldn’t ask.