<p>My father passed away suddenly and left about $100k to my daughter, now 11, who will gain control of it upon attaining 18. I know his intention was to set up a college fund for her, rather than just give her the money, but he never got around to it. My question is: How will college financial aid programs treat this money? How will it affect the contribution that I and her mother have to provide? Is there a difference between the way a public university might treat it and the way an aid-blind college would? Any information would be very helpful!!!
Thanks!!!</p>
<p>Move the money into a 529 plan account owned by your daughter & you being the Custodian. There is no tax implication for doing this; when your daughter goes to College at 18, you can still report this asset as a parental one in the Fafsa.</p>
<p>Who controls it now?</p>
<p>The OP’s daughter owns $100K now and will still continue to own it when she turns 18. Just that when it is in the shell of the 529 account you can at least shield it from the child better(no bank statements/no taxes on income earned).</p>
<p>The daughter can still buy her own Corvette at 18 if she wants too; the other choice is to start spending down part of the $100K toward her extra-curricular activities/summer camps and start a Parental 529 plan with those amounts in order to preserve the donor’s intent.</p>
<p>To be honest, I’m not sure who controls it now; the funds have yet to be disbursed from the estate, so I’m not sure what form they’ll take. I guess my ex-wife and I will jointly control it, as our child’s legal guardians, but under exactly what sort of legal arrangement I don’t know. I do understand that the child will take control of it, as soon as she reaches 18. Hopefully, she won’t buy a corvette.</p>
<p>Please check with a financial advisor/tax attorney. We were in a similar situation - you have to be very careful when setting up to whom or to what the estate distributes the money. If set up incorrectly, there will be tax implications, especially if it passes through perhaps your hands or your daughter’s hands before landing in the account - a direct payment to the account may be best.</p>
<p>Colleges will consider the money hers - and it is hers. As our financial advisor told us, don’t expect financial aid for college - the money is there, to be used for college, so spend it for college and count your blessings that you have it. And, that has been the case for us. The University recognizes the assets, we receive no financial aid beyond offered loans, and the inheritance is paying the college bills. Meanwhile we continue to pay into our 401K/403B so that we can have a retirement.</p>
<p>When our son turned 18 we set up a joint account - it is his account & money but I am a signer so I can pay the tuition bills. We track the money together (good money management lesson, too).</p>
<p>We did not do a 529 as that wasn’t an option 15 years ago, so we ended up with a trust (and a trust is taxed at the parent’s rate, so I don’t necessarily recommend that either).</p>
<p>Sorry for your loss - I’m sure this is a difficult time.</p>