<p>My daughter is a high school senior turning 18 in January 2015. We have recently come to realize that a custodial UGMA set up by her grandfather with her as the owner will affect her financial aid awards (it is valued at $11,000 now and would be 20% as a child asset). I am a divorced custodial parent with fairly low income so she would qualify for some federal grants. We know it is too late to transfer the money to a 529 but now her grandfather and his financial advisor are suggesting liquidating it into cash to put into an account in her name prior to year end. It is my understanding that this is not the best idea or may even be illegal? I know the money would need to proven as used for her benefit other than regular parental support obligations. Since I didn't know about this fund, I haven't kept any receipts that would prove the use of the money. She has done competitive cheerleading for 10 years that has definately cost at least that much. But at this point without having kept track of the costs wouldn't it just make more sense to wait for the funds to become hers at 18. At this point converting it into cash that she can used to pay for her freshman year. So for her freshman year it would be considered her asset on the FAFSA, sophmore year it would be considered income and for her junior and senior years she would then get the most financial aid available? Any thoughts would greatly be appreciated</p>
<p>Why is it too late to withdraw the money and put it into a 529 account?</p>
<p>That’s what my father and his financial adviser stated to me. And/or that is not something they want to do?</p>
<p>If you put the money in a 529 before you file the FAFSA, it is considered a parental asset.</p>
<p>Can you find out why they do not want to put into a 529?</p>
<p>I can ask.</p>