My family is in the process of setting up a special needs trust for a disabled relative (not a student). The trust is already drafted and signed but the funds are still sitting in our bank. Should we include these funds on the CSS profile and explain in SC section? Or should we just omit the funds, since they will not be available anymore? If the latter, do we need to send any supporting documentation right after the submission?
Note: Merged two threads on the same topic
ED
Is there some reason that the Trust can’t be funded immediately, so that when you complete Profile the money really is no longer in your bank and actually is not available?
I think you have to report each dollar as it is invested at the time you sign the form. Future intentions are not considered.
Here’s my comment from yesterday:
Is there some reason that the Trust can’t be funded immediately, so that when you complete Profile the money really is no longer in your bank and actually is not available?
It just takes time for the trust to become legal and it is not possible to transfer money until it is. We asked an attorney if money can be held in an escrow but even then it is not immediate.
I guess it is possible to argue with the FA officer that the finds are not available… the question is - what it better to explain and argue or to omit and wait for verification.
Is the date soon for the trust set up, and fund transfer? Can you wait to do,the fafsa and Profile until that is completed?
You can’t omit or Fudge your assets. They MUST be reported as of the date you file the FAFSA and Profile forms.
This discussion was created from comments split from: CSS Profile.
Not unless there is some kind of special circumstance. You said that “the trust is already drafted and signed,” which should mean that the Trust now exists as a legal entity. You can get a tax ID number for the Trust online in 10 minutes using the IRS website, and with that a bank account can be opened in the name of the Trust. That’s all you need to fund the Trust by transferring money out of any account that needs to be reported for financial aid purposes. It really is that simple.
Why is this really any different than putting assets/properties in another family member’s name in order to qualify for more aid?
If this is kosher, then why not put assets in one’s widowed mom’s name with the understanding that when she dies the assets go back to the original owners?
This sounds fishy
Belknap- one tiny correction to your otherwise fine post- it takes LESS than 5 minutes to get the tax ID. Just did it to help out a friend who is executor for a parent’s estate and is a fine person and very well organized but not especially tax savvy.
I don’t think this sounds fishy at all- these financial vehicles are very common in families which have this circumstance. Just get moving and move out the assets.
Mom- I think this is different from re-titling assets to a grandparent as you describe. In your example, the assets get parked. In this instance, the assets are going to be spent (and typically spent down to zero) to support a disabled family member who will likely leave an estate of close to nothing. The funds are there to augment social security and/or disability, not to provide a corpus for distribution to heirs.
I don’t know anyone who has set up a special needs trust for fraudulent purposes (and I can’t imagine a lawyer would participate in such fraud). The beneficiaries are typically adults with Down Syndrome and the like who cannot live independently-- family members create these vehicles to make sure that after the parents or other relatives die, there is still some financial support to pay for group housing or similar.
There are significant restrictions for setting up a special needs trust…and for the eventual use of the monies in that trust.
But as @BelknapPoint pointed out…once the trust is set up, and signed, the money should be able to be transferred into the account.
Thanks all for very insightful comments. Yes, the trust is a SNT and is for a disable old relative who has a very irresponsible caretaker. We are trying to protect assets from this individual.
moderator’s note
Closing thread because OP has multiple threads going on and would be better served by having all of her information in one place.