Stolen funds in a bank account are indeed the property of the named person on the account, but there can be an order to hold the fund if a court has evidence of theft or fraud. Barring that order, yes, the bank is going to pay the owner on demand. Yes, the money in an account is the property of the account holder. Who else would be the owner? The bank is not going to give the money to anyone else who claims to be an owner, that the funds belong to a club, that the funds are community property. Those are things that can be proved in a court, and the court order presented to the bank as an order to pay an amount to another person.
I don’t think funds in an account in your name only are shared assets.
This is not an asset owned with others, it is in a single name only bank account. If your car is titled in your name only, even if you share it with 3 other people, even if 3 other people contributed to the purchase price, the DMV will consider it owned by one person, the name on the title. You want ownership rights, put your name on the title/account/property. That’s how the laws of ownership work.
The bank won’t consider this a shared asset. Here is a definition of accounts by Sun Trust Bank: Individual Account”
is an Account which is owned by one individual. Upon the death of such individual, the Account [boldwill belong[/bold] to the Depositor’s estate and will be administered by the person designated or appointed by court order"
You are conflating what the bank considers/assumes to be ownership with what the actual reality may be. They are not necessarily the same thing, and for reporting assets on FAFSA or Profile, they don’t have to be.
Second…we don’t know the source of the money for the “club”. If the OP had a tag sale and decided to designate those funds for the “club”, then the money is hers…she just designated it for another purpose.
We also don’t know what the money intended use is. If it’s for a graduation weekend trip, senior prom expenses or the like…that would be very different (in my opinion) than money being held for donation to a charity like a soup kitchen, or the like.
I’m thinking this is more like money in a regular savings that the family has designated for retirement purposes. That money has to be counted as an asset on the financial aid application forms.
If the bank holds the account and says you are the owner of any funds in that account, how could it be anything other than that? The bank will only give it to you, you must pay any taxes from the earnings in that account. You are the owner. I don’t see it can be any other way. It is titled in your name, just like a car, house, etc. FDIC insures the owner of the account - the name on the account. If you don’t want to be the owner, then you need to set it up differently. The bank defines the funds as the property of the person whose name and SSN are on the account. Anything you put in the account is yours, as that is what you are telling the bank when you make a deposit.
The bank’s rules =/= FAFSA’s rules or Profile’s rules. Of course the bank is going to consider the funds in the account as owned by the person whose name is on the account. Why would they do anything but? The account owner hasn’t given the bank a note saying that $X in the account belongs to someone else, and even if that happened the bank wouldn’t be obligated to honor it (and very likely wouldn’t). But that doesn’t mean that there isn’t really a different owner for some of the funds in the account, and FAFSA and Profile are based on reality, not what’s convenient for the bank.
Using your logic, a student who has saved thousands of dollars from summer jobs could simply withdraw the savings from an account in his name and deposit it into a parent account, without the intent of making a gift to the parent, immediately before completing the financial aid forms, to get the benefit of the lower parent asset assessment. Since you believe that this would make the parent the proper “owner” of the student’s earnings on the day that FAFSA/Profile is filed, it would benefit the family to do this, and then put the money back in the student’s account the next day. Voila! Now the student owns the money once again! Sorry, but it doesn’t work that way.
When issues such as this have been litigated, courts have decided that the mere fact that someone’s name is on a bank account does not meant that person has ownership and use of the funds in the account. The underlying facts must be considered as well.
You’re right, we don’t the details about OP’s specific situation. My assumption, and the basis of my disagreement with twoinanddone, is that the deposited funds don’t belong to OP in her individual capacity and that she does not have the discretion to use the money however she pleases.
As I mentioned previously, thumper, you yourself have argued that the simple act of a student moving student money into a parent’s bank account does not automatically make the parent the owner of that money for FA reporting purposes.
The funds deposited in your name, assets titled in your name, earnings paid by an employer to you under your SSN, are yours. If you withdraw your funds and put them into another person’s account, those funds, according to the bank and IRS are now the property of that account holder. If the OP wasn’t concerned about that presumption, she wouldn’t have asked the question. IMO, the OP converted the funds to personal funds when she deposited them into a personal account. Money is bearer paper, belonging to the one who presents it. If those paying the club dues had written the check to Mayfield Bingo Club, the bank would not allow them to be deposited into a personal account as most will not take third party checks.
Say the amount was $250,000 and the OP also had $250,000 in a second account in the same bank. Bank fails and FDIC comes in to pay out insured accounts. The OP doesn’t get to claim that the money in the first account isn’t hers, it really belongs to her club, and therefore the FDIC must pay for each account. No. The money in an account belongs to the account holder, and is insured as titled. If the OP overcomes the presumption and proves the first account is really money that belongs to the club? Too bad. The insured is the named account holder.
This weekend a bunch of us went to a football game. One person charged the tickets on her credit card and we all paid her cash. If she’d filed a FAFSA this weekend, before she paid the credit card bill, all that cash would have been sitting in her account. Her money. She might never pay the credit card bill. FAFSA doesn’t care. It is a picture of your accounts and assets on the day you file.
So in the scenario I outlined above, where a student withdraws thousands in earnings from his account on Monday and deposits it in an account in a parent’s name, FAFSA/Profile is completed and filed on Tuesday, and the bank transaction is reversed on Wednesday, you say that the student’s earnings in the parent’s account are accurately reported on FAFSA/Profile as a parent asset?
This is a little too simple. If, for example, she now refused to use the money for the purpose agreed upon, those other people could sue her in small claims court and claim that the money was theirs. If there was enough evidence, they’d probably win.
Obviously, commingling the funds is a bad idea. But holding them doesn’t mean that OP “owns” them in an ultimate legal sense.
Strictly speaking, I’d say take the funds out and put it in a shoebox or give it to a friend. That being said, I wouldn’t be too hard on the OP – this sort of thing happens all of the time. Our HS swim coach just collected $4500 in checks from parents payable to him for competition suits, because it would have taken months to get a disbursement from the school system and the suits were needed in a week. There just wasn’t time to deposit the checks into the school account. The key is to do everything very openly and with detailed records and full disclosure.
The FAFSA and the CSS/PROFILE are supposed to be snapshots of your assets on a particular day. However, is that money really hers? That’s a legal question. She doesn’t have access to it for personal purposes, she doesn’t think of it as hers, and it’s in there temporarily as a flow-through. I think you could argue successfully that it wasn’t her asset.
However, I’m always one to play it safe and by the book – either report the numbers including what’s in that account or get the money out of the account. It’s just not worth potential hassle later even if you would win the argument.
The club members might win, and then OP would owe a debt which she could pay from that account or her other funds. If the club members won and ran down to the bank and said ‘the court said she owes us the money, now pay us’ the bank would say not without garnishment against the holder of the account because it is HER account, her funds. The club is just a creditor. The club also wouldn’t be limited to the funds in that account, but could collect from any assets of the OP.
Yes, BelknapPoint, if you complete the FAFSA on Tuesday, you report the status of your accounts as of Tuesday. People do plan the day they file to not be a payday, or the day after you pay the mortgage and the bills for the month. People even pay the tuition before filing to exhaust the cash assets. FAFSA is a snapshot of the day you file, not the day before or the day after (CSS may have its own rules about pending payments or assets, I haven’t complete one). It is not fraud to give away all your money the day before, it is not fraud to file the day before your payday even it that money was already earned and you know you will receive it by automatic deposit the next day. It is correct not to include the million dollars your grandparents are going to give you tomorrow (you’d have to report it the next year as funds received). Snapshot.
I agree these examples are not fraud, and good financial planning (to include timing of FA filing) can reduce EFC. But you are also saying that a student putting his own money into a parent account on day 1, filing FAFSA/Profile on day 2 with a representation that the student’s money is now a parent asset, and then reversing the bank transaction on day 3 is not fraud, and with this I strongly disagree. If this scheme of moving student assets into parent accounts on a temporary basis is a legitimate way to reduce EFC, why isn’t it widely promoted? Why isn’t every student with a least a moderate amount of liquid assets advised to do this simple maneuver to have those assets considered at the lower parent rate? The answer to these questions is easy- it’s unethical and goes against FAFSA and Profile rules.
It is not illegal to give your money away. If you do it to avoid creditors and get an advantage in bankruptcy, there is a clawback provision that will bring the money back into the estate but that is because the bankruptcy code provides for that… I don’t think the FAFSA rules have a clawback provision.
I’m not talking about making a gift. I’m talking about a scheme to reduce a student’s assets during the single “snapshot” day that FA forms are completed. The student moves his earned money from a bank account in his name to a parent’s bank account, files FAFSA/Profile the next day representing that his earned money is now a parent asset, and the following day reverses the banking transaction, without ever intending to make a gift. In your opinion, is this financial maneuvering a legitimate way to reduce EFC? Would the Department of Education (FAFSA) and the College Scholarship Service (Profile) find this to be acceptable?
There is no way to reverse the transaction/ gift. From a banking standpoint, the transfer is made and completed, and the student can’t just call up and reverse the transaction a few days later once the transfer has happened. If the student withdraws the money and takes it home, it is still his asset. If the student withdraws the money and gives it away, it is no longer his. If he gives the money to someone else to hold, then it is a bailment and still his asset, to be reported just as if he’d taken the money home or put it in another account in his own name. I do not see a way for the FAFSA to call it fraud as long as there is no condition put on the moving of the asset. FAFSA wouldn’t object if the money was used to pay for a car on Monday, FAFSA filed on Tuesday, car sold on Wednesday and money redeposited. All legal.
In the bailment case, where the student gives the money to the parents to hold for him, it should be reported as an asset of the because it wasn’t given away. Would the parents have to claim it as their asset also if it appears in their bank account on FAFSA filing day? IMO, Yes. They have an asset, they have an offsetting obligation/debt, but fafsa doesn’t ask about debts just about assets on the day of filing. It is the same with reporting income and assets. If you earn $100,000 and it is in your bank account on the day you file FAFSA, it is both income on the income line and an asset on the asset line. Double hit.
As I said, neither party (student or parent) considers the transactions to be gifts. The student and a parent are working in concert. The transaction can of course be reversed because the parent can make the withdrawal and give the funds back to the student, who redeposits the funds in his own account.
There is a condition: both student and parent agree that after FA forms are filed, the funds will be withdrawn from parent’s account and redeposited in student’s account.
“Asset of the…” who, student or parent? If you say “student,” then…
So in your opinion the same funds would have to be double reported, as an asset of the student AND as an asset of the parent? And no, this is not the same kind of “double hit” that occurs when income is retained as an asset and must be reported as both.
Please tell me that you don’t dispense legal or financial advice on a professional basis.
This is a completely different situation. No money has been moved anywhere. The description given by the OP states this is money that some folks have put aside for future use. For all we know, this money is all this parent’s money. Maybe this parent is donating to the “club” at a future date.
Sorry, but this parent deposited the money in their account. It wasn’t moved there out of someone else’s account.
And just because the parent says this belongs to a made up club, does NOT mean this money really belongs to anyone else. It sounds to me like money that they hoped to dedicate to some future expense for a group of kids. Sorry…not a club in my eyes…but rather a personal allocation of personal funds.
I’m not talking about OP’s situation, because not enough facts were provided to determine where the money actually came from or where it’s supposed to go. I’m talking about twoinandone’s contention that, no matter what, if funds are in a parent’s account, that money can’t possibly be considered “owned” by someone else for FA purposes. I have referenced past posts that you have made stating that the simple act of moving student assets to a parent’s account does not mean that those assets are now reported on FA forms as belonging to the parent.
Moving money anywhere else does not mean it’s no longer yours. If you take it out of your account and stuff your mattress…it is still your money. If you give it to someone else to hold…it is still yoir money.
I have no idea why you keep quoting me on this,when it has absolutely nothing to do with this OPs situation.
I don’t happen to agree with twoinandone on that. If the money is yours, it doesn’t matter where it is placed.
This money appears to be at least partly the OP’s.
The question is…why does the OP have this money at all if it is not his or hers? And why would other’s put their money in her account?