Son Inheritance

[BelknapPoint]

BelknapPoint But if the Profile instructions tell you not to report the student owned 529 as a student investment and instead to aggregate it with other parent assets/investments, how is it possible for a college to back that out and treat it differently (assuming they don’t pick you for a deep dive and ask for specific bank statements etc)?

The Profile Explanations/Special Circumstances section at the end of the form is the place to make special note of things like this.

Although slightly indirect the instructions on page 24 of the link above appear to confirm that the expectation is for the 529 to be aggregated with other parent investments:

“Total value of parent assets held in the names of their children:

Include funds in custodial accounts, UGMA (Uniform gifts to minors) accounts, or other savings and investment accounts for the student’s siblings who are under the age of 19 and not enrolled in college.
Funds held in 529 college savings or prepaid tuition accounts should not be included here, but should be included as one of the parents’ investments.”

That instruction deals only with assets that are considered to be owned by a parent but have been titled in the name of a child (including any siblings). It’s less common now, but under older tax laws it was a often the case that a parent would stash parent assets in a “child’s account or investment” in order to receive more favorable tax treatment. Changes to the kiddie tax have greatly reduced this practice.

On page 23 of the linked Profile instructions, parent investments are covered. 529 plans are explicity referred to as being properly reported as a parent asset, but there is no distinction made between a 529 account owned by a parent, owned by the student, or owned by someone else when the student is named as the beneficiary. A 529 account that is legitimately owned by the student (not a parent trying to disguise parent assets as belonging to someone else) should, in my opinion, be reported on Profile as a student asset, unless a college financial aid office specifically instructs otherwise in accordance with that school’s policy. FAFSA does not require reporting like this; instead, FAFSA explicitly directs that student-owned 529 accounts should be reported as a parent asset.

For a high school senior who will be sending Profile to a number of schools, my recommendation would be to report a 529 that is legitimately owned by the student as a student asset, and note in the explanation section how many dollars reported as a student asset/investment are in a student-owned 529. In subsequent years, after the student has selected a college to attend, ask the financial aid office what the school’s policy is on calculating the student’s EFC when a student-owned 529 is involved, and how the school would like that asset to be reported on Profile (as a parent asset or as a student asset).

[lookingforward]

So much we don’t know here, with only one OP post. (Including son’s age, year now, stats. Or what target colleges, how expensive they expect it to be.)

[thumper1]

Agree with @lookingforward

What are the reach schools? For some kids, these would be small LACs where their stats weren’t at the top. For others, they would be their state flagship. For others…schools like HYPSM.