Yes. If the parent is the owner, the parent controls and can change the beneficiary at will. In other words, all the 529 money is available for the student.
Did you run Amherst net price calculator? Run it with the expected higher income and all assets
Look at tuition, fees, room and board minus any GRANTS. How much is that?
@contdes Do you get a K1 or any other tax filing documents as a beneficiary of the trust? FAFSA verification is done with IRS data, either from tax transcripts, or the (currently unavailable) IRS Data Retrieval Tool. Does the trust appear anywhere on your tax return? Does it appear anywhere on the return and schedules you will submit through CSS? The anonymous advice on these boards is well and good, but I would suggest you contact an experienced college financial aid planner to discuss the exact requirements for disclosure. For example, it is common for college financial aid planners to suggest that families expecting inheritances that might impact financial aid eligibility request that the estate maintain custody of the assets and not distribute the assets until after graduation. Lots of technicalities, seek advise from an expert.
Agree with TDY. Get a lawyer to review the trust document- can you donate your share to a nonprofit organization which can then “sell” your two weeks of usage? Can you gift your share to your sibling and just get out of the ownership business?
And on the flip side of the coin, is giving up the ownership worth it?
The $8000 difference in EFC might not make a big enough difference in aid, especially if income is going to be increasing by $30k anyway.
If the EFC was increasing from $10,000 to $18,000 it might be bigger impact, but from $50k to $58k most likely not.
Amherst 2017/18 tuition, fees, room and board is listed at about $68,000. How much grant aid would they give for current income +$30k, and current assets (condo included), and home equity?
Would it be enough to be affordable?
If not, you might be better off focusing on merit aid.
Just make sure your “college financial planner” knows about the college financial,aid application process…and isn’t an annuity salesperson.
Oh…and that college financial aid planner won’t be free…so factor that into your financial planning.
I don’t think the OP needs a college financial planner- who is likely going to know ZERO about the real estate/trust issue.
You are better off with an experienced CPA or lawyer who understands the ins and outs of the type of trust you talking about. The financial aid stuff is going to be relatively straightforward- you guys either earn too much for aid at the schools your kids are targeting- so the real estate is irrelevant; you guys definitely qualify for aid and so figuring out a strategy for the real estate is worthwhile; or the real estate is a wild card (i.e. at the mega generous schools like Princeton you likely qualify for aid, at most colleges you don’t so you need a solid merit only strategy regardless of what you do with the real estate).
A college financial planner is going to wing it when it comes to the trust. That’s not going to help you.
And that lawyer won’t be free either. So factor that into you your finances.
I do agree that you need to know the terms of this VERY clearly.
But really…if you can’t afford the net cost of,a school without the trust…does it matter?
OP said there’s nothing on her tax returns about it.
But for FA, colleges can look for theoretically tappable assets, whether or not on tax rerurns. Unfortunately, even restricted trusts are considered game, as it stands.
And if OP is named for management purposes (she said any profit on sale goes to the sister,) there’s nothing she can deed away. Eg, if this is set up to add OP’s voice to any decision to sell, there’s nothing she can deed away. She’s a trustee serving a role. But she still appears, on paper, to golleges, to hold value.
Agree, most college fin planners won’t know the fine points about trusts. Likewise, a CPA may know zip about FA.
See if this link comes thru. http://www.finaid.org/savings/trustfunds.phtml
Looks like she may be able to declare zero value? Someone check me. She has no present or future value?
I think you need a professional to review the trust document. What happens if (god forbid) something happens to the sibling? What’s the provision for the OP’s demise- ownership passes to the kids, passes to the sibling, passes to the nephews/nieces? What happens if the other sibling (who as it stands currently is the only financial beneficiary) gifts her shares to her kids? What happens if the other sibling declares bankruptcy- what provision is there in the trust for determining fair market value in case of a forced sale?
I wouldn’t be in a hurry to either declare your ownership as zero (in case there is some monetary or monetizable value), nor would I be in a hurry to assume that a financial aid person has the technical skills to figure out a legal solution here.
Wow. You guys are awesome! So much helpful advice. Okay, so I’m trying to learn more about the trust and the condo ownership. As PP pointed out, I am there as a decision maker (sister not so good at decisions). Anyway, I looked up the property on the county tax assessor site and it is listed as Mother’s Name Trust + Father’s Name Co-Trustee (he is still living). He is the one paying the taxes and, I presume, getting the tax benefit for that. So according to the link above, he would be the “owner” of the trust. Also, does this remark suggest that since I will never receive the trust principal, it is not my asset?: “if you will receive the trust principal at a future date, you must count the net present value of the trust principal as an asset”.
I asked my dad about all this and he doesn’t really know the answers to my questions, so I’ll have to talk to his accountant and/or lawyer. I only saw the trust document once a few years ago and don’t remember much. Looking back, I’m wondering how someone who doesn’t even know they are a beneficiary prevent themselves from committing fraud on a FAFSA. B/c that would have been me a few years ago.
As for the college choices: I think the schools he’s looking at do not have merit aid. But they do have work study and my child will ABSOLUTELY be working while he is in school. We can figure out a way to make up the $10k/ year with loans or begging grandparents or taking on extra work, I guess.
And I did mean INCREASE our EFC (not reduce). I am having a hard time keeping all this straight!
Can any of you tell me where applicant child’s 529 $ goes vs other children’s 529 $ or is it the same place?
What is the current value of your parents’ investments? (I thought applicant child would go here b/c it does have a note that says “529”)
What is the current value of assets your parents hold in your siblings’ names? (I figured this is where the other 529s go b/c while I am listed as owner, they are assigned to children’s SSN.)
This isn’t what I’d worry is fraud “with a capital F” and multiple exclamation points. This is a genuine attempt to understand and handle properly. If you make a mistake, you’ll be able to explain the research steps and your decision. I call that, for many FA bullets, “defensible.”
Of course, you don’t want a later surprise. So, yes, get the pro advice. An estate attorney with CPA experience can be good. Or a JD CPA.
So there are 3 529s?
If you are specifically named in the Trust document and you are assigned duties as a Trustee and/or as a fiduciary, manager, etc., you need to have a copy of the document in your possession.
If you as the student’s parent are the owner of multiple 529 accounts for household members, they all get reported on FAFSA question 91, regardless of who the named beneficiaries are.
No. This question is for parent assets that have been retitled in the names of children in order to gain a tax advantage. This does not describe a 529 account that is owned by a parent for the benefit of a child.
Deleted.
Okay, got it. Yes, there are three 529 (one for each kid). I checked with Fidelity and I am the “owner” with each child as beneficiary for each of the three accounts. Each account is connected to one kid’s SSN. And got it: line 91 for all (totalled). But on CSS maybe different? The confusion seems to be around the words “owner” and “held in parents’ name”. That is still unclear to me.
About the trust: I don’t think I’m name as anything other than a beneficiary but my dad is going to email me the doc today so I can figure it out.
And OP- do not confuse “Work Study” (which is a federally funded program) with your kid working while in college. You may not qualify for Work Study which in no way prevents your kid from looking for and from getting a job-- however, Work Study will be a very specific line item on your financial aid award and if you don’t qualify (it’s income based) your kid can still get a job and work.
Just to clarify so you understand how the various components of a financial aid award work.
Well that was fast. Just got the trust doc. It says “I am the trustee” (meaning my father since it is Father’s Name Trust) and "I and my successors are collectively referred to as the “Trustees”. I’m starting to think the fact that this is a Qualified Personal Residence Trust makes a difference. Later it says “Trustee will continue to hold all remaining assets of the trust estate for the benefit of my daughters as a separate trust.” So I take that to mean my dad. But it seems somewhat contradictory re who is trustee (or trustees).
Good grief, you need a degree in finance to understand all this.