My child is a college freshman and we’re preparing to submit the FAFSA and CSS for next school year. My mom very recently passed and had a trust which contained her house (no other assets). My sibling and I are the beneficiaries of the trust/her house. We are in the process of determining value of the house, deciding whether to sell or keep/rent out and haven’t yet come to agreement. When I google info about financial aid and trust I see a lot of info about trust funds, but I don’t think that’s what we have. I am beneficiary of a trust from a very recently diseased parent and assets/ my actual ownership of these is not settled as it’s so recent. Any advice as to what to put in CSS profile now? There are other reasons why filling out CSS/Fafsa NOW is beneficial to us, including spouses current unemployment
Has this trust transferred to your name? If so, the value if your share of the trust must be reported on the financial aid application forms as an asset.
If you don’t actually have ownership of this trust yet…then file your FAFSA now.
BUT you do need to check the provisions of the way the trust was set up. It’s very possible (might be probable) that this asset transferred to you upon your mother’s death. If that is the case, you are the part owner…now and need to include this asset.
You mention your spouse’s unemployment now. Was your family income for 2018 below $50,000? The income reported on the forms is from 2018. I believe you need to report that amount…and if your spouse is currently unemployed, you would need to request a special circumstances consideration in order for his income not to be considered.
I agree with this.
What makes the situation"not settled"? If the trust existed before your mother’s death and held the house, then when your mother died it’s likely that ownership did not change (the trust is still the legal owner). What probably changed is the beneficial interests, moving from your mother to you and your sibling. Your share of the trust’s beneficial interest is reportable on your child’s financial aid forms as a parent asset.
I’m assuming the OP meant “not settled” as in “we don’t know the market value of the property yet; we don’t know if there’s a tax lien on the property, etc.” not as in “we don’t know who owns the house”.
OP- is that what you meant?
I’m very sorry for your loss. What kind of trust is it? My parents have a Medicare Asset Protection Trust that contains their house and some other assets to protect them from being liquidated to pay for long term care. That kind of trust is a whole different ball of wax. Advice from a financial aid consultant was that that type of trust is not included anywhere in FA paperwork since it can not be accessed. If that is the type of trust you are asking about, and it has not been settled, I would not include it. Once it is settled, it needs to be accounted for, obviously.
You need to consult the lawyer handling this estate to find out if the asset has transferred to you upon your mother’s death.
Many people put their houses into trust for their relatives to avoid having it go through Probate. If that is the case…this asset is already yours, and likely conveyed to you upon your mother’s death.
That you haven’t figured out what you are going to do with this house really doesn’t matter…if it’s already your asset.
BUT really, the only way to know is to contact the lawyer. Find out what kind of trust it is…and if the asset has already conveyed to you. Do that first thing tomorrow.
The answer as usual, unfortunately, is it depends. However to clarify.
The trust “funds” or becomes yours the moment your mom passed.
But I think you are ok to file this year with the info you have. But talk to the lawyer.
there are many times trusts that require settling for valuation purposes but this is an administrative and not an ownership question- handled before distributing outright to heirs or to other trusts. It sounds like this situation is bit more straightforward.
Now if there is a mortgage to be satisfied the valuation of the trust assets itself are in limbo. If you need to get an outside valuation this too takes time.
Also it depends how the trust asset was owned beforehand too. You may have a step up in capital gains taxes or there may be some taxes due as well if there was appreciation within a trust. Make sure with your cpa and lawyer.
there maybe estate assets outside of the trust that need to be settled.
If your mom owes estate taxes federally or at the state level, my guess is Fafsa would not be an issue for you.
Also the trust document itself is important. If it is a irrevocable trust the dispositive provisions are really important. You are not the owner of the trust, it’s a unique entity. You have access to income or principal that can vary. If it is really restrictive you won’t have to report much. If it allows for health education and maintenance. It’s a different calculus. If you are not the trustees and it requires you to seek principal distributions and these can denied.
So take a good look at the document. Talk to your lawyer and ask about it.
If it’s worth 300k and can be sold readily and the assets are half yours with easy access you may have to report it. Just like if you won 150k in the lotto or received a big bonus and it’s now sitting in the bank.
However I would submit my information required ASAP and if the values are uncertain, honestly, they’re uncertain. Next year it will be much clearer for you.
Just don’t do anything that could have repercussions for you. They don’t expect you to use all of this for college.
And you need to be honest. You need to value this asset at its worth. You can’t just decide to make it a lot less because you haven’t figured out it’s value yet…or haven’t figured out what you are going to do with it.
You my need some guidance, as noted above to determine the actual value, and your share of it.
For FAFSA purposes, the asset value will be assessed at 5.6% of your share of the amount.
However, this is a secondary piece of real estate and Profile schools can assess it anyway they choose to.
First off, my condolences. IANAL. I would call the FA office of the schools you’re planning to send the FAFSA/CSS and ask for guidance. Talking to an attorney would be advisable as well.
My parents setup an irrevocable trust for me. We have no access to the capital/assets until they pass. When they do pass the assets are then ours. We included the value under our assets, not our sons but we did include it. Either way, we include the assets in the trust before death or as our assets after death.
If you’re the beneficiary of the trust then I would think the house is an asset whether everything is settled or not. For a house I’m assuming fair market value would be reported on the FAFSA.
Not legal advice but some good articles below.
https://www.finaid.org/savings/trustfunds.phtml
https://www.savingforcollege.com/article/how-do-trust-funds-affect-financial-aid-for-college