My wife and I set up a joint trust years ago. It is currently unfunded, and wouldn’t be funded unless one of us dies. If one of us dies, for example, life insurance money would be deposited in a trust account for the benefit of the surviving spouse, who could use it he/she pleases. I’m guessing it would still be a parental asset at that point if any of the kids applied for college.
However, If BOTH of us die, the money would then be managed and spent by an appointed trustee for the benefit of our kids. Let’s say the trustee is my sister, who would also be guardian. My sister would NOT be required to spend it on education, but just on anything she deems advisable for our kids, including education. (So there is no issue with the money being restricted and unavailable.) Would the trust fund then be considered student assets, or “parent” assets of the guardian? Since she’s not supposed to spend it on herself, I suppose it would be considered student assets for any kid that was applying with FAFSA or CSS?
Does anyone have further insight into this?