<p>It’s up to $13,000 now. Each sibling and each of their spouses could give her that amount each year.</p>
<p>thumper, my DH and I did do that, with “gifting” done in fall and again in Jan (before we filled out FAFSA). We received the money in late summer so almost $50,000 was turned back to her immediately. I’m glad we explained our plan to the schools because they could saw that $ disappear again the next year.</p>
<p>My brothers don’t share my viewpoint.</p>
<p>Does anyone know how colleges view inheritance in this situation? My DD’s teammate is a senior currently applying to colleges. I suggested she call a few schools to get an idea of their policies. Her dad died, leaving an inheritance (not sure if it’s in the kid’s name or the mom’s name). This $ is important to get them through the next few years, while the mom tries to re-establish a career. The dad’s future earning potential is lost, obviously. BUT I imagine it will look like they are “rich” today. Anyone go through this?</p>
<p>^^^</p>
<p>Not knowing the details…typically when a spouse dies, the surviving spouse inherits everything (since money was community property in the first place). There are some exceptions to this.</p>
<p>Hopefully the mom has invested the money into some kind of protected fund that does an annual payout - rather than a lump sum sitting in savings.</p>
<p>Although it may seem logical that that money is needed for future living, who knows how F/A will consider it. they may just look at it as savings that is available. Afterall, there are divorced moms who lose their second income all the time. Harsh as that is :(</p>
<p>Any inheritance money that is in regular savings or CDs or the like will be viewed as an asset when the financial aid calculations are done.</p>
<p>My D received an inheritance from her godfather. He died when she was starting HS. This inheritance went into a “trust” as she was still a minor. She received it on her 18th birthday in “cash” deposited into a bank account. Her school basically divided the amount in 4 and tacked it onto her expected contribution over the 4 years. It was considered income. She did not have it in hand when she started college because she was not yet 18. I had to borrow the amount from relatives to pay her bill until she received her inheritance. </p>
<p>When they ask you to fill out forms and declare a trust or inheritance–do not declare it until you have it in hand. If it is not yet in your name and you are not paying taxes on it yet, then it is not documented.</p>
<p>OP maybe you can delay getting your inheritance until after the new year so you do not have to report it on this year’s paperwork. It will, however, be considered income next year, so be prepared.</p>
<p>Definitely speak directly with your college. Both my DD and my DS were in college at the time and neither school considered my inheritance as income. They did count it as an asset (in our case, it was a parental asset).</p>
<p>Thanks for reviving this thread. I expect we will be facing this issue sometime during the next 4 years, and I hadn’t even thought about the implications for FA.</p>
<p>Thumper1,</p>
<p>It is my understanding that money in retirement accounts is invisible to FAFSA. Would this include an inherited/beneficiary IRA as well? If so, then a reasonable solution could be to tie up money coming from IRA/401k/Annuities that can be converted to beneficiary IRAs for the heir. This would mean that only the money withdrawn from the IRA would count as income each year. In the case of an 18 year old, the required minimum withdrawals should be pretty small.</p>
<p>My H and his sibs inherited a house, which is in a trust. As soon as the house sale closes the money will be divided among them. I’m trying to figure out whether Profile requires that we report this as “untaxed income” - that’s what the IRS considers it. </p>
<p>From reading the early posts in this thread it appears that we should report it as untaxed income and then beg the college to make an exception that would simply treat the amount as an asset. How it’s characterized makes a big difference in our EFC when I use the online calculators. If anyone knows of a way to report it as an asset instead of income, I’d love to hear about it!</p>
<p>We did some huge research into trusts a couple of years ago (some of you old timers may remember that). It is my understanding that if a property or account is held in trust, the value of that trust to each beneficiary MUST be reported on the FAFSA and Profile. In other words, if a house is in a trust and the parents are the beneficiaries, the value to the parents of the trust MUST be reported. And it does NOT matter whether you have access to these funds or not…what matters is if you are a beneficiary of the trust.</p>
<p>Perhaps Kelsmom or Nikki can comment.</p>