Hello all. This is my first post here.
Looking down the road at filling out the FAFSA, I’m seeing that when you report investments that you a) do report trusts, but b) don’t report the home you live in. But these aren’t exclusive, and it is commonplace to put a home you live in into a revocable trust to avoid probate down the road.
My question is, when you fill out the FAFSA, do you report the value of a home you live in that is in a revocable trust, or not?
(For clarity, I’m the parent of a child and I’m wondering whether this will impact their financial aid, not my own.)
Based on a common sense interpretation of the FAFSA instructions.
The FAFSA, in an attempt to be simple enough for almost any literate person to complete, is by necessity not a complex form with instructions that address a multitude of esoteric situations. The FAFSA form itself, as you point out, does not specifically address a primary residence that is being held in a revocable trust.
From the FAFSA instructions:
Investments include… trust funds…
Investments do not include the home you live in…
If a revocable trust has as its only asset the student’s primary home, do not report anything regarding the trust. If a revocable trust has multiple assets including the primary home, only report the value of those trust assets that would otherwise be reportable if they were not held by the trust. All of this assumes that either the student or a reporting parent is the constructive owner of the primary residence through the revocable trust.
I called the FAFSA helpline to make sure. The representative confirmed that a home (as well as IRAs) that aren’t otherwise reportable do not become reportable when the asset is included in a revocable trust. Thank you all for your feedback.