Sibling's bank account and financial aid

<p>^^^ jerzgrlmom,
I think the situation is as you describe it. If the sibling is either 1) in college (at whatever age) or 2) aged 19 or over (whether in college or not), you clearly DON'T need to report assets in that sibling's bank account on Profile. But while the older sibling is a college student, you certainly were required to report her bank accounts as "student assets" on her own Profile, and (I think) to report the younger sibling's (under 19, not in college) bank accounts as "parental assets" under PA 105. At least until they added this truly confusing language cited by 'rentof2 in the 2008-09 instructions. Now I truly don't know what you report.</p>

<p>Yeah, I found that additional sentence in the 2008-09 instructions. I thought perhaps they put it there for the common sense distinction you mentioned, but sure, it is not clear. I think it is there to perhaps clarify the <em>intention</em> of the question, which is to reveal funds the parents may be holding in one place or another, not that little brother's pet-sitting money is available to pay for big sister's college costs. That is legally squishy, as you point out, but would seem to be more sensible as a matter of clarification of their intention.</p>

<p>This is all very interesting and timely to me as my children will soon be receiving some inheritance that will be going directly to them, it is in no way shape or form my money. The oldest is in college currently and will spend her money more or less immediately on tuition and other expenses. However, the other is still in HS, and I really hadn't yet considered the impacts on FA for her older sibling. This of course goes beyond pet-sitting money, but it is definitely not mine to spend on her sister's education either.</p>

<p>Ok, I'm confused too. I thought the 2007 instructions that I posted on page 2 were clear, but now with the 2008 addition things got very muddy.</p>

<p>"include custodial accounts" - this seems clear enough, being accounts owned by siblings with parents as custodians. Legally, minors cannot hold stock or mutual funds in their own names, thus the need for a custodial arrangement. Money in a custodial account is the child's money.</p>

<p>"don't include assets owned by your siblings" - huh? What else would a custodial account be? </p>

<p>Note that checking accounts aren't explicitly dealt with here. If a sister's babysitting earnings go into a checking account owned by her but with a parent as a custodian, why should it be treated any differently than if that same money went into her UGMA?</p>

<p>I hate to say this, but I really think the right answer is to report all sibling assets for siblings that are under the age of 19/not enrolled in college. Parent-owned 529s get reported as parent assets regardless of who the named beneficiary is, but all other sibling assets (cash, checking, savings, gold coins, UGMA/UTMAs, savings bonds) should be reported under "sibling". What the PROFILE colleges choose to do with this information is, of course, a mystery. But when it's time for the sibling to apply for financial aid, there won't be any question about why these assets have suddenly appeared (except of course in the case of an inheritance).</p>

<p>Ah. So interesting. The FA application designers sure do make it easy, don't they? ;)</p>

<p>I'm glad my younger will be college too this fall, even though she is just 16. Not that there will be anything left in her checking account by next year, but in any case it will relieve me of confusion about PA-105.</p>

<p>It is possible for minors to own some kinds of assets directly, not in custodial accounts. For example, if a grandparent dies and leaves real estate--say some farmland in Iowa--directly to the grandkids. That could be an asset "owned by your siblings" not in a custodial account (which would be a bank account, a stock brokerage account, or a mutual fund account). So the sibling-owned farmland wouldn't need to be reported.</p>

<p>Also, as I read these instructions, you apparently don't need to include a minor sibling's trust fund (if any). The applicant needs to report her own trust fund as a "student asset," but unless I'm missing something, there's no requirement that a minor sibling's trust fund be reported as a parental asset; this is different from a custodial account, UGMA account, or UTMA account. So again, say the grandparent dies and leaves a trust fund for each grandchild, designating the parent (or a bank) as the trustee. Each grandchild is the beneficial "owner" of the trust fund. The financial aid applicant must report her trust fund as a student asset; but the minor sibling's trust fund is an "asset owned by [her] sibling" that is not a custodial account, UGMA account, or UTMA account, and therefore is not reported as a parental asset.</p>

<p>So I'm back to thinking ALL custodial accounts held by minor children not in college should be reported.</p>