Trust fund and FA

cptofthehouse
Wed, 22 Jul 2009 11:00:07 +0000

The thing about college is that it is not something to be viewed in a vacuum outside of other things in life. This is not a question that can simply be answered here as a lot of information is needed.

The first question is whether the money can legally be used for purposes other than college education. I am assuming that it can, since this is what is being considered.

The other question that I think is very important, is how desperately the money is needed for the benefit of the child. Clearly if he is being hurt from lack of basic provisions, it would be foolish to hold that money for college. But the definitions of need and basic provisions can be quite diverse. I think a big fear is that your sister takes the money to pay off her debts, for example and leaves her son with a big fat zero for college.

We don’t know how dire your sister’s financial straits are and how it is affecting her son. That is something that is determined only by direct knowledge of the situation and even then is subject to opinion.

I can say that if the son may be eligible for financial aid, that 20% of it would be expected to be used each year for college if it is in his name vs if it is in his mother’s (about 5% for the parent). Whether that will matter in his case, is not determinable. If he wants to go to a school that uses PROFILE and wants the father’s financials, he may not be eligible for financial aid anyways. Also having the money in mom’s name may make it more accessible to creditors and other situations where the money can be taken.