I’m a junior at a CSU, and I recieve federal and state grants and federal student loans. My current EFC is 0, but I am 24 years old, so that is solely based on my own small income (My EFC was 0 was I was 22 and 23. My parents are poor.). My maternal grandmother just died, and, while we still have to take everything through probate court, there is going to be quite a bit of money when the house gets sold (the lot is appraised at well over a million, because Silicon Valley). I’m in line for a share, and my mother wants to give my brother and I part of her share to use for our educations, so whenever this goes through the courts I could well have a few hundred thousand, less taxes.
I know I have to inform the financial aid department of this, but when? I’ve never seen something go through probate court, so I have no idea how long it takes. Do I need to tell financial aid now because I know about this right now, or do I tell them when I actually get the money? If I get money halfway through a semester or something, does that effect my grants that have already been given out? Can I pay off federal student loans that have already disbursed to me as soon as I have the money, since I can just full pay at that point, or is paying off loans that early not allowed because it means the federal government will get little interest? Is there anything else I need to know about financial aid and large windfalls?
I wouldn’t tell them until you have the money. Anything could (potentially) happen between now and then. Your mom could change her mind. The land could sell for considerably less. Some family member could fight the decisions made and stall it for a couple of years. Just continue as you are and see what your situation is when the money is dispersed. I believe you could pay the loans off as soon as you have the money to do so.
If it becomes your asset, then your aid next year would be affected. The only thing matter is the money you and your family have (and the income from the year before that) when you file FAFSA. Honestly, it the property is well over 1 million and your mother (and perhaps you) get a significant share of it, you don’t need financial aid for your senior year in college. You still have the grace period after graduation for paying back the loan.
Student loans can always be prepaid without penalty.
I think you just have to inform the FA office when you file FAFSA again. It’s September. I’d say it is unlikely the lot will sell and the funds will clear probate before Jan 1 so you may not have anything at that time. Answer the questions carefully. Look at the dates they ask for earning and assets.
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I know I have to inform the financial aid department of this, but when? I
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Not until you have the money. sounds like it will be AFTER you file FAFSA after Jan 1 for your final year.
Sounds like it won’t affect your aid at all.
Going thru probate will take awhile. At this point, you don’t have the money.
At this point, it’s iffy if you will directly get anything. It may go directly to her immediate heirs (her children, your mom). Your mom may choose to give you some, but she won’t likely be doing that until after you file the next FAFSA, which is your LAST FAFSA.
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If I get money halfway through a semester or something, does that effect my grants that have already been given out?
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NO.
File early next year for FAFSA. At that point is the “snapshot” of what you have. You won’t likely have anything then. doesn’t matter if later you get anything.
Nope, it is not an asset until it is in your name. An asset may pass directly, outside probate like an insurance payment/payout or the deed to the house could pass outside probate through joint tenancy or estates by the entireties, but until it does pass to the OP, it’s not his. He can’t rent it or sell it or even go have a big party on it. It belongs to the estate. The estate will pay taxes on it and it will be sold by the estate representative signing the deed over to the new buyer. The proceeds will then be distributed through the probate court or the trustee, and taxes on the property will be paid from the sales proceeds.
I would not tell them at all. Estates can take ages (I just closed one as a personal representative that took 9 years from the time of death until it closed!). Now we did make some distributions sooner, but I am not sure any were in the first year. If you can get past your next FAFSA (and any other annual FA documentation) before the distribution, you are probably okay.
Thanks for all the advice. So, hold off on telling financial aid until I actually get the money, file FAFSA early, and the money might count for my senior year at all? So I could use that money to pay my way through graduate school instead?
As to how the estate is being handled, my sister is in control of the estate. To make a long and unpeasant story short, my grandmother was an extremely abusive parent, and my mother, uncle, and I have been avoiding her. My sister was there at the end because she lived in the area, but nobody else was there. My grandmother didn’t care much about what happens to the estate (major bad blood in the family and all that), so she signed over full control of the estate to my sister to let her decide who gets what instead of writing a will. My sister decided that everything of value gets sold, and the money gets equally distributed amongst my mother, my uncle, herself, my brother, and myself (the thing about my brother and I getting part of our mother’s share is a seperate arrangement between the two of us and our mother, and is on top of us getting our own shares). Us five are the only descendents my grandmother had, and those four of us who are legal adults have all said that we agree with my sister’s decision, so I don’t see an inheritance fight springing up.
You don’t directly tell “financial aid” anything. You indirectly tell “financial aid” through the information on your FAFSA as of the day you submit it.
The best scenario would be you submit the FAFSA early next year before the inheritance is yours.
Spaceship- your sister will have to satisfy any creditors (including local property taxes on the house, outstanding medical bills, etc.) before anything gets distributed.
So relax- it will take a long time for any cash to actually land in your account. And right now you have no idea how much it’s going to be- the lawyers, accountants, real estate agent, appraisers, etc. all get paid ahead of the heirs.
It seems your name would not be on the property but you will get some money later on. So it would not be a problem for you at all until you receive the money and submit FAFSA afterward. As you will be a senior next year, it may not be a problem after all.
So…let say you inherit $200,000. How much does your college actually cost? Is it a school that meets full need?
Even IF you have to pay something for your senior year, it’s not going to be the full $200,000 because college doesn’t cost that much. And you say in your OP that your mom wants to give you some of her share to help with your educations. So…if you DO end up having this money prior to the FAFSA filing, you can use it as she intended.
I know this is your mom’s business, but when all the dust settles and the five of you get equal shares of the money, you and your brother might want to convince mom to keep her money for herself.
You said your family is poor, so your mom could use the money to get a nice place and for her retirement.
You and your brother can use your shares for grad school and/or pay off existing student loans.
I know you didn’t ask, but you will receive a very nice windfall - be careful with it. For example if you need a car when you graduate consider a nice used one instead of a brand new one. After you graduate, if you get a job near your mom’s house consider living at home instead of renting an apartment.
You could check out the forums on the Bogleheads website and search for inheritance or windfall to see what other people have to say. (That website is named for people who are fans of 86-year old Jack Bogle who founded Vanguard).
I just wanted to say sorry for your loss. Despite what you said about your grandmother’s personality, it is still sad that you or your family won’t have the opportunity to repair a strained relationship.
I admire your mom’s generosity toward you and your siblings. Kudos to your sister for taking on the responsibility of her role, and to all involved for not making this any more difficult than it is.
Since your sister is the Trustee of the estate, you can ask her to hold onto your share until you are ready to receive your it-if you trust her to do so, that is.
If there was a will , and no one challenges it, Probate can happen in Calif within a few months.
Land in SV will sell as soon as it is put on the market.