Hello,
My father has my grandmother’s (his mother’s) house willed to him for ownership when she passes away. The property is worth around $300,000. Is this supposed to be reported as an asset on the FAFSA? She has not passed away and will not pass away for the next decade or so. I already completed my FAFSA a while ago and we put the property as an asset because we were unsure and it made our EFC really high. If its not supposed to be recorded on the FAFSA, should we make the correction and remove it? I fear that I won’t get as much financial aid that I need if we don’t remove it, as my parents and I are lower middle class. I was already accepted to the university I am planning to attend and the financial aid offer will be released in around three weeks. I looked all over and I didn’t find a definite answer.
Thank you!
This should not be reported on FAFSA as your parents’ asset because it isn’t.
Okay, a correction on what I was asking, the property is not exactly willed to him, he has his name on my grandmother’s property and he will own it when she passes away (which won’t be for a while). This is a life estate, right? Would this then be reported on the FAFSA?
If it actually is a life estate, yes, it must be reported on FAFSA. This is one of those situations that reminds me that grandparents should think about effects on college costs when doing their estate planning. You and your parents would probably be better off without this life estate. That is, the amount grandma is saving by going outside probate is probably less than the amount you and your parents are losing.
So all in all, my father’s name on my grandmother’s house for him to inherit ownership of the house when she passes away is an asset to be reported. How would the net worth be calculated?
Is there a mortgage on that house?
It is completely paid off.
Then what is the house’s value?
If right now, it’s half your dad’s and half your grandma’s, wouldn’t only half the value be his?
The value of a life estate interest won’t necessarily be half the value of the house. In this case, the amount the dad needs to report is probably less than half. There are actuarial tables that allow one to figure out the life estate value (which grandma holds) and the remainder interest (which dad holds).
BTW, I hope you get a good financial aid package.
Is the transfer deed filed? If not, in some states it is still your grandmother’s property. She is the owner until that transfer deed is filed and she (or someone else) could file something before the actual transfer takes place.
If your father has filed the deed, it’s his. The value has to be figured out because if there is a life estate attached, it has a much lower value than if he owns it outright.
Looking at post 2, is it possible Dad is listed as co-owner on the deed? What document would give him a life estate, the will?
Bottom line, I think this is a “special circumstance” that should be reported to the financial aid office at your school. Only they will know how it impacts their aid award. Searchbon the school web site for a form by that name or call and be prepared to provide specific information about the deed and house. Good luck to you!
According to an actuarial table it would make the remainder around $160,000. Would that then be reported?
Correction: it would be $160k with my grandmothers age and $56k with my fathers age. The remainder value is with my fathers age right?
You use your grandmother’s age, because the life estate runs for her life.