<p>I am going to be getting a inheritance which will be payed by check. I was wondering what I need to do in order to have this asset transferred to my parents in order to have it counted at 5.6% not 35%. Does the act of having a check written to me in my name make it automatically my asset, and untransferable? Can I just transfer the check to my parents? Do I go ahead and cash it, deposit it, whatever, and then transfer it? Is there a limit on the amount that a check can be and still transferred? Is there a time frame for all this? The check hasnt been written yet, according to the lawyer handling the estate however the check <em>has</em> to be in my name. Is this true? Any way to get around this? Barring all this, if it is counted as my asset for next year, will the check/inheritance amount be counted, or will the amount remaining in the amount counted? How does an asset protection allowance work? I heard it is 45,000, is this accurate, and will this apply to both FAFSA and the CSS? </p>
<p>I would appreciate any help as I currently have a extremely low EFC (300), and need to plan this out so that I am not stuck with an amount that I am expected to pay due to funds I no longer have. I would like to use the extra money to pay for AP tests, as well as a few other things. Any advice is appreciated. Thanks!</p>
<p>Jay, I think you are going to have to keep this in your name and report it. Although if it income received in 2006, you don’t have to report it on this year’s FAFSA, which asks for 2005 income figures and the amount of assets you have as of the day you first submit the form. Though its the kind of thing most colleges are going to want to know about.</p>
<p>But on next year’s FAFSA, you’ll have to report both the income and whatever assets you have. You can spend down the assets somewhat, but I’d advise that you only spend on things you really need. So if its a matter of buying a computer or a car that you will be taking with you to college - -go ahead. But in the end you are probably going to have to use a significant chunk of your inheritance to pay for college expenses. </p>
<p>The asset protection allowance is something that applies to your parents, not you – that is, if your parents are low-income, they won’t be expected to spend assets for colleges.</p>
<p>You can use the calculators at finaid.org to get a sense of how this is going to end up affecting you. I kind of understand how you feel – this is the kind of situation that would be excellent for you if it had happened 2 years ago – or if it happened the year you graduate – but its very bad timing for a low-income person to get a one-time windfall of a fairly large sum of cash right in the midst of the financial aid process. You really don’t have time to make the sort of investment decisions that could maximize the financial benefits to you, and of course the amount you are talking about is not enough to finance more than a year of college at most private institutions.</p>
<p>Jay, I agree with Calmom. But I’d like to put a different spin on this. I think you should be grateful that you now will have this inheritance to help you with college expenses. I don’t know the specifics of your inheritance, but perhaps the person actually hoped that you would be able to use this money for your education. So many folks from all incomes do NOT have these kinds of unexpected money receipts. As much as you might like to save that money for something else, perhaps this is a good use for it. And as Calmom said…you CAN use this money for things you need.</p>
<p>It is not all that uncommon for certain inheritances to be declined by the recipient, for tax purposes. What you’d have to find out is who the alternate beneficiaries are. If not you, will it go to your parents, back to the estate for an alternate beneficiary? Check with the attorney for the estate. Perhaps it can be declined and would go to your parents or (even better) grandparents or other relatives who would hold and use it for your benefit. (Be careful it doesn’t impact on them even more; for example the new Medicare provisions now have a 5 year look back and other nasty gotchas)</p>
<p>Absent that, you might be able to at least provide for some benefit down the road. If you are over the legal age in your state (18 or 21 depending), you can give almost any number of give tax free gifts of up to $12,000. That would be $24,000 to your parents in the first year. Perhaps you could give gifts to other close family members who would agree (off the record) to use it to pay your tuition or other college costs. (not to younger brothers and sisters, though since it would have to be held in trust for their use). </p>
<p>Now that startegy won’t help you in the first year (or two depending on how much you get) because FAFSA looks back to the year before. But it might put you in the position to get financial aid by your Junior or Senior year or grad school.</p>
<p>You’d have to carefully check out and orchestrate this.</p>
<p>An inheritance is an asset problem only. There is no income event associated with an inheritance. Therefore, the only problem you have is how much money you will have in your own name come next year when refiling your FA forms.</p>
<p>I do not suggest refusing the inheritance. This can create needless problems. You can use the $12,000 per person allowance to move as much as $24,000 to your parents. This is a common practice among families that have family limited partnerships. If the amount is greater than $24,000 or your parents would then exceed their asset protection allowance, there are various sheltering techniques you can use to keep the money in your name but not have it hurt you.</p>
<p>Scottaa, Thanks. So I can understand APA: Lets say the oldest parent is 50. Does this mean the first 50,100 is protected? What about the other chart that had much lower #s available for APA (a family of 4 was xxx dollars)? Is this income dollars, and the age chart asset dollars? Which chart would you go by- age or # in household? I would think both factor in? And then lets say you were self employed and your business was valued at 20,000. Does this mean that 40%, or 8,000 is protected? Then of the remaing 12,000, that is not protected, how much of this is amount do parents need to pay, and how is this factored in? Is the 12,000 then included as part of the 50,100 asset protected dollars, meaning outside the business, you may have 50,100-12,000= 38,000 protected at age 50?</p>
<p>I think the other chart you were referring to was the income protection allowance. They are both counted but against seperate items.</p>
<p>For a business owner, it is the discounted value of the business that is assessed, not the maket value. The balance of the business value simply dissappears from the calculation.</p>
<p>I’m afraid I’m not feeling the best today, excuse me if this doesn’t clarify the question.</p>