<p>I am confused. I thought that money held in a UGMA account gets listed under the students finances on FAFSA, but on the FAFSA it says to include any monies held as investments in UGMA accounts with the parents investments? Huh..certainly won't include it twice! Whose does it go with...mine or my daughters??? (I know; it should have been converted to 529 but that is another story)</p>
<p>UGMA accounts are listed on FAFSA as student assets, because they are owned by the student. They are not parent assets.</p>
<p>It's not too late to convert your daughter's UGMA to a student-owned 529 prior to filing FAFSA.</p>
<p>You are correct--UGMA/UTMA accounts are student assets, except that UGMA/UTMA 529 accounts are listed as parent assets for dependent students (starting this year).</p>
<p>The FAFSA online NEED HELP? has a couple of notes that clarify the confusion on the form:</p>
<p>"Investments include real estate (do not include the home you live in), trust funds UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.</p>
<p>Note: UGMA and UTMA accounts are considered assets of the student, and must be reported as an asset of the student on the FAFSA, regarless of the student's dependency status.</p>
<p>Investments also include qualified educational benefits or education savings ac****s such as Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans. Note: Students who must report parental information on this form should report all qualified educational benefits or education savings accounts owned by the parents and/or the dependent student as part of the parental assets in question 92.</p>
<p>Investments do not include the home your parents live in; cash, savings, and checking accounts; the value of life insurance and retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)."</p>
<p>Wow -- I just checked the 2009/10 FAFSA form and instructions and it is very clear:</p>
<p>FAFSA Page 2
Notes for questions 42 and 43 (page 4) and 92 and 93 (page 7):</p>
<p>"Investments include ... UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, ... "</p>
<h1>"For a student who must report parental information, the accounts are reported as parental investments in question 92, including all accounts owned by the student and all accounts owned by the parents for any member of the household."</h1>
<p>'a student who must report parental information' is a dependent of the parent(s).</p>
<p>I don't know if this is a mistake on FAFSA's part, but since it is so unambiguous and clear, I would accept this generous offer and list the child's UGMA as a parent's asset.</p>
<p>Only qualified education accounts owned by the student are reported as parent assets. Any other accounts, such as UGMA's, are reported as student assets.</p>
<p>From the completing the FAFSA instruction</p>
<p>
[quote]
42. Net worth of investments. Net worth means current value minus current debt. Investments include real estate such as rental property, land and second or summer homes. Do not include your primary place of residence (that is, your home). Include the
value of any multifamily dwellings that you own, except that you must exclude the portion of the value of a dwelling that is your principal residence. Investments also include trust funds, Uniform Transfers to Minors Act (UTMA)/Uniform Gifts to Minors Act (UGMA) Custodial Accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, Coverdell savings accounts, 529 college savings plans, the refund value of 529 prepaid tuition plans, installment and land sale contracts (including mortgages held), commodities, etc. Do not include the value of
life insurance and retirement plans (401[k] plans, pension funds, annuities, non-Education IRAs, Keogh plans, etc.). </p>
<p>You should report the value of all qualified educational benefits or education savings accounts, such as Coverdell savings account, 529 college savings plan or the refund value of a 529 prepaid tuition plan in Question 42 if you or your spouse own the account and you are not reporting parental information on this application. </p>
<p>If you are a dependent student who owns qualified educational benefits or education savings accounts, such as Coverdell Savings Accounts, 529 College Savings Plans, or the refund value of 529 prepaid tuition plans, you must report the values in Question 92 along with your parents asset information.
[/quote]
</p>
<p>And from the FAFSA 'help' page</p>
<p>What</a> is your current net worth of investments?</p>
<p>
[quote]
What is your current net worth of investments?</p>
<p>This is question 42 on the paper FAFSA.</p>
<p>This field cannot be left blank.</p>
<p>The net worth of your (and your spouses) current investments is the amount left over after deducting the debt from the value of the investment.</p>
<pre><code>For example: You (and your spouse) own an investment property valued at $100,000, however, $75,000 in debt is owed on the property. The net worth of the investment is $25,000 ($100,000 $75,000 = $25,000).
</code></pre>
<p>If you (and your spouse) own multiple investments, total the net worth amounts and report them as a lump sum.</p>
<pre><code>For example: You (and your spouse) own two investment properties. One propertys net worth is $25,000 and the other propertys net worth is $15,000, the total net worth of current investments is $40,000.
</code></pre>
<p>If your (and your spouses) net worth as of today is:</p>
<p>Net worth value Enter
One million or more 999999
Zero or less than zero 0</p>
<p>Round to the nearest dollar and do not use commas or decimal points.</p>
<p>Investments include real estate (do not include the home you live in), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.</p>
<p>Note: UGMA and UTMA accounts are considered assets of the student, and must be reported as an asset of the student on the FAFSA, regardless of the student's dependency status.</p>
<p>Investments also include qualified educational benefits or education savings accounts such as Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans.</p>
<p>If you are not required to report parental information and you own (or if married, your spouse owns) any of these qualified educational benefit plans report the current balance of the plans as a student/spouse asset in question 42. The amount to be reported for a prepaid tuition plan is the "refund value" of the plan.</p>
<p>Investment value means the current balance or market value of these investments as of today. Investment debt means only those debts that are related to the investments.</p>
<p>Investments do not include the home you (and your spouse) live in; cash, savings and checking accounts; the value of life insurance and retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.).
[/quote]
</p>
<p>So the form instructions are in error as I suspected. This will create some problems, as some people will only read the form instructions and not read the online help. The link you referred to is kind of buried.</p>
<p>JustDisDadYaKnow,</p>
<p>I'm not sure that those instructions are in error, but they definitely are not clear. "For a student who must report parental information, the accounts are reported..." What accounts? The 529 accounts or the investment accounts. I agree with you--there are going to be alot of student assets reported in the parent section! </p>
<p>Re UGMA/UTMA: The investment definition applies both to parents and to the student. So last year (my first year with FAFSA) I decided (because the instructions were not clear) that parents could have parentally owned UGMA/UTMA accounts (leftover from their childhood, perhaps?--I have no idea if this is really possible) and students could have student-owned, parent as custodian UGMA/UTMA (the usual situation). I believe that the instruction paragraph about the 529 plans and account reporting was added this year (to further muddle UGMA/UTMA reporting).</p>
<p>I did recently have a heated discussion with a friend about reporting 529 accounts. She did not want to believe that she had to report Johnny's, Susie's and Billie's accounts all on Johnny's FAFSA. Since they were the standard 529 accounts (parentally owned), they were all parental assets and that instruction phrase "all accounts owned by the parents for any member of the household" applied.</p>
<p>That's funny Lunar_eclipse about your friend. Maybe when she calms down she'll figure out it's better to assess 3 kids at 5.6% each (with asset protection) than each one at 20% (without asset protection).</p>
<p>This has come up before. The form instructions aren't technically in error, but they are confusing.</p>
<p>The FAFSA form instructions are trying to be helpful by defining "investments." They use the same definition of investment, which includes UGMA accounts, in the section for reporting Student assets, as they do in the section for reporting Parents' assets.</p>
<p>So they're just defining what they consider to be an investment in that particular sentence accompanying Q42-43, not commenting on the ownership of that investment.</p>
<p>It's confusing, and they should probably clear it up.</p>
<p>FWIW, if the adult listed on the UGMA account dies, the UGMA assets are included in the estate, especially for tax purposes. Makes no sense, but then again, we are not the ones making the tax laws.</p>