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FAFSA question about trust

ProfessorMom1ProfessorMom1 Registered User Posts: 382 Member
A few days ago, I was notified that I am now a co-trustee of a family trust (I’m also a beneficiary). There is no money, per se, in the trust but it “holds” my parents’ home (I don’t really know the language for explaining this). I’m trying to figure out if I need to put this on FAFSA and/or CSS Profile for this year or if I can wait until next year or even the year after since there are no tax implications for last or current year (2017 taxes have already been paid by parent before trust established). I understand that my EFC will go up with more assets whenever they are added/included. The new deed, once it is recorded and as I understand it, will list my name and the co-trustee’s name. The co-trustee will be making the tax payments and claiming them on his tax return. So for the time being none of this will appear on my taxes.

I don’t want to do anything wrong, but I also don’t want to include more than I am legally required to on the FAFSA. I’ve asked both my attorney and CPA this question and neither knows the answer. I've also canvassed the internet and it's all quite confusing. Most answers address only beneficiaries and assume the trust holds money or has only one trustee. Any advice is much appreciated.
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Replies to: FAFSA question about trust

  • lookingforwardlookingforward Registered User Posts: 32,498 Senior Member
  • thumper1thumper1 Registered User Posts: 76,166 Senior Member
    We certainly don't have enough information to give you an answer.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,912 Forum Champion
    Many grandparents have Living Trusts set up so that their assets go directly to their heirs w/o probate. Does that mean all the listed heirs are supposed to be listing "their future share" on FAFSA? I would imagine that many don't...simply out of ignorance. Many don't even know that their parents have a Living Trust.

    When my in-laws died, we learned that instead of a LT, they had simply added all of their kids' names to all of their accounts (they had already sold their home, but if that hadn't happened, they would have simply added names to the title). In-laws never told anyone about this except their oldest son. So, the younger kids who did file FAFSA, never knew that they already had a share of these assets.
  • thumper1thumper1 Registered User Posts: 76,166 Senior Member
    @mom2collegekids

    When you sign the fafsa, it is clear that you are putting the information accurately as you KNOW it to be. It is fraud to KNOWINGLY not include assets.

    We don't know anything about the provisions of this trust...and without that info...it's impossible to say what is what.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,912 Forum Champion
    <<<
    are putting the information accurately as you KNOW it to be. It is fraud to KNOWINGLY not include assets.
    >>>


    Certainly. I'm just wondering how this all works. It would seem (to me), that being named on a Living Trust as an heir when parents die would be somewhat similar to being on the same parents' will. But it seems like they're handled differently with FA apps. A person could be named as the future sole heir of multi-millions in assets and not have to list it on fafsa or CSS, but have to list their share of a living trust.
  • thumper1thumper1 Registered User Posts: 76,166 Senior Member
    @BelknapPoint do,you have any idea how a loving trust affects the fafsa.
  • ProfessorMom1ProfessorMom1 Registered User Posts: 382 Member
    Okay, looks like I have some more research to do. The document I have doesn't include the word "living," just "Trust for Children." I really know nothing about finance and trusts. I will call my CPA back. I assume I will include my %, once I figure that out. If the "hit" on the EFC is only 5.6% of that, then it won't be very much. My husband raised the question of FAFSA language about taxes and crosschecking eligibility for aid with 1040 and the IRS. Is the FAFSA based solely on tax filings or does it include other things with no tax liability? As I read more, I'm thinking the latter: doesn't matter if any tax liability, still goes on FAFSA.
  • thumper1thumper1 Registered User Posts: 76,166 Senior Member
    Your assets are all listed on your FAFSA form.

    As an example, savings accounts earn a pittance for interest. The interest is what is on your tax return. The actual account balance is what is put on your FAFSA.
  • twoinanddonetwoinanddone Registered User Posts: 21,925 Senior Member
    You can be a trustee with no ownership in the asset, and it sounds like that's what you are.
  • ProfessorMom1ProfessorMom1 Registered User Posts: 382 Member
    I'm sitting here thinking: if only they could've just waited another month or two to do this!
  • SweetbeetSweetbeet Registered User Posts: 595 Member
    edited September 2017
    If your parents are alive and the trust is revocable, and you are not entitled to distributions from the trust until they're dead, then no, it's not your asset. If the trust is irrevocable, you may have a beneficial interest, it depends on what can be distributed to you, and when. Merely being a trustee does not give you a beneficial interest, but if you are a current beneficiary, then you may have a reportable asset, once the house is transferred to the trust.
  • ProfessorMom1ProfessorMom1 Registered User Posts: 382 Member
    Thanks, everyone. I came to the best conclusion possible after talking to accountant and heeding your advice. Was able to determine my "beneficiary" percentage and added that amount to aid docs. Finished FAFSA and CSS last night!
  • intparentintparent Registered User Posts: 36,904 Senior Member
    If the trust is empty, I would not report it. One something pours over into it, then it is a different story.
  • BelknapPointBelknapPoint Registered User Posts: 4,310 Senior Member
    If the trust is empty, I would not report it. One something pours over into it, then it is a different story.

    If the Trust holds real estate as an asset (as indicated by OP), it is not empty. OP is apparently a beneficiary of the Trust, and therefore her share of the Trust assets needs to be reported as a parent asset on her child's FAFSA, which it sounds like has been done.
  • ProfessorMom1ProfessorMom1 Registered User Posts: 382 Member
    Correct. There is (only) real estate in the trust. I'm one of the beneficiaries so reported the value of my percentage as an asset.
This discussion has been closed.