Legitimate ways to reduce student's assets?

[vballmom]

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A question – if we use 529 funds for the first year of college, is that amount reported as unearned income for the student in the subsequent year’s FAFSA?

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<p>No, withdrawals from a 529 are not considered income.</p>

<p>Transfers to minors in UTMAs are irrevocable. Custodians of UTMAs have a fiduciary duty to spend any funds for the benefit of the student. Gifting that money to the parent does not fall under that category and is in fact unethical. Spending the money on college is both legal and ethical. In reality the IRS rarely goes after custodians who raid UTMAs, but there are occasional lawsuits filed by minors.</p>

<p>[The</a> Minor’s Right to the Money](<a href=“http://www.fairmark.com/custacct/minorsright.htm]The”>http://www.fairmark.com/custacct/minorsright.htm)</p>