Trust Fund Kids - Inequitable Distribution

<p>In looking over our children's finances, we realize that there is a current severe inequity in their educational trust funds. In a nutshell, D#1 has a well funded trust account that was set up for educational purposes when she was born, where D #2's is about 10% of D#1 due to market changes and the death of the primary grandparent who was the money manager and contributor. Our kids are 6 years apart. The trusts are in the student's names.</p>

<p>If we had realized the inequity 2 years ago, we would probably have totalled the amount, split it, and told D#1 that that was her portion even though there is technically more in her account. She would have understood, and complied. We blew it, and didn't notice the inequity until we filled out the profile in November. </p>

<p>What would you do in this situation? </p>

<p>We would anticipate that both kids will go to four year colleges of comparable quality. D #1 has applied and has been admitted to a private school (still waiting for some others). Four years of tuition with the merit scholarship that she was given from the University will close out her trust account if we use that money only.</p>

<p>If you have 6 years to go and the D1’s trust fund will pay for her school then spend the next 6 years building up D2’s trust fund.</p>

<p>However if you might otherwise be eligible for FA, I would suggest it not be in the student’s name but in the parent’s, or in a 529 account that is counted as a parent asset. For FAFSA, assets in the student’s name have a much higher impact on the EFC than assets in the parents name (20% vs 5.6%).</p>

<p>I guess as the bonds mature we should start transferring them into the 529 account then? Good idea. I am pretty certain that our income level will preclude any aid except merit - best to tighten the belt and start saving for D2. Does anyone have any suggestions as to how to find a good financial counselor to help us with this? We have an accountant, but I don’t know that he is an expert in college funding…don’t know where to start…</p>

<p>Bump…any ideas, anyone?</p>