<p>My husband's parents both passed away over the last couple of years, leaving their assets in a Family Trust Fund, with my husband and his sister as equal beneficiaries. We both have kids nearing college age. Does the Family Trust, if left as such, get considered as assets when applying for financial aid? It currently has it's own tax ID # and taxes are filed for it independently of our own personal taxes. The grandchildren headed toward college in a few years are NOT named in the trust, only their respective parents.</p>
<p>The share of the trust that belongs to the parent must be reported as an asset on FAFSA. it will be treated the same as any other parent asset. The impact it has will be depend on the total assets the parents have. Parents have a certain amount of asset protection based on the number of parents and the age of the older parent. Over that the assets affect the EFC by 5.6%.</p>
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<p>Yes…all beneficiaries of a trust MUST report their share of the value of that trust on the FAFSA (and the Profile if you have to do that one too). It does NOT matter if you have access to this money at all. You are required to report it regardless.</p>
<p>We did extensive research into this a few years ago. There is no out for this. It doesn’t matter if the trust is something you have no ability to have access to now. The reality is that all trusts can be dissolved under certain circumstances. So this IS an asset for you.</p>
<p>Thank you for your quick replies - I was pretty sure that was the case. I’ve since found the info in the FAFSA instructions specific to trusts. I just needed to make sure I had my facts straight.</p>
<p>If you have time and if the trust is an amount high enough to matter, but you are low income so would get aid without it, about the only thing you could do is request the trustee distribute your share in cash, pay off any debts including your mortgage with it. Then it would not be considered in the formula for EFC, but that is a very small percentage of people with income low enough to make that a worthwhile pursuit.</p>
<p>Run the numbers through the FAFSA formula with and without the trust value and see what it shows. Unless your EFC is $5k or less, chances are most aid would be loans so you would be better off keeping the liquidity</p>
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<p>I’m not a trust expert…or a tax expert…but seems to me if you take a cash distribution from the trust, it would be reported as some kind of “income” on your taxes and for FAFSA purposes…one would think.</p>
<p>Also, this I DO know…you would have to look at the provisions of the trust. Many trust do not allow for a distribution unless the trust is completely disolved…and there is usually a defined way for this to happen within your trust document.</p>