<p>I am new to the college confidential, but I have not been able to find an answer to my question. How do undo the damage of a trust. 18 years ago my parents wanted to contribute to my daughters education so in our ignorance we set up a trust. Now I find out having a trust in my daughters name is a bad thing for ECF. Is there any way to undo the trust, like give money back to grandparents,
If this has already been answered please point me to the right answer</p>
<p>What kind of trust is it?</p>
<p>what is ECF?</p>
<p>As far as whether you can dissolve the trust, and how you would do it, you need to consult with a lawyer, not anonymous posters on the Internet.</p>
<p>As far as how it will affect financial aid, there are a couple of very knowledgeable posters here who can advise you; but the general rule, as I understand it, is that anything you do as far as moving assets around in your financial aid base year is not likely to help.</p>
<p>Not sure how this is a bad thing. Spend it on the education, and when it’s gone the EFC will go down.</p>
<p>Look into converting it to a student owned 529 account. If this is possible (I am not very knowledgeable about trust rules), even though it would be owned by the student, it would be treated by FAFSA as a parent asset which is more favorable for the EFC. But, make sure you look into any income and tax consequences. If there is a large income generated by whatever you do, that may be more of a negative to your EFC than the trust is.</p>
<p>The EFC is based more on income than assets. Don’t forget that to qualify for federal grant aid requires a very low EFC. (below around 5200 ish). Most schools do *not *meet full need, and many include lots of loans. You may not be eligible for much grant aid even without the trust. Having the money in a 529 account makes it available for college and may make you eligible for more aid. But it might be just loans.</p>
<p>Depending on what year your dau is in high school, it may be too late. that said, if your sole purpose in moving money out of a trust that was set up specifically to pay for her education is to make it look like she needs more FA that apparently she does not, then it is an unethical thing to do.</p>
<p>Don’t edge over to the cheapskate column. The money is there to pay for college. Use it for that purpose. Don’t compare your kid or your situation to a neighbor or cousin who makes about the same income and ends up paying a different amount for tuition (who knows, maybe their kid really is that bright or athletic!)</p>
<p>So spend the trust money. It may be that you were thinking that the trust money was to last four years, as in $40K /4 years = we can spend $10K a year on college. </p>
<p>That’s not how your math may work out. It might be you pay $20K for years One and Two (because your EFC is high) and then you pay much less for years Three and Four because your EFC has changed dramatically (ie, you have no more resources). </p>
<p>Get a copy of “How to pay for college without going broke” which lays out the details that you need to know. </p>
<p>Again, do not compare your situation to anyone else’s. I promise that someone in the coffee group or book club will have a kid not paying a penny (or so they will tell you). Be happy for them – and then get your D through college the best way you can!</p>
<p>I should add we had the same challenge (grandparents setting up some dollars in the child’s name). We were told that to move the money to our names would be illegal. Don’t do that! So we arranged for checking from that account and wrote a check each quarter from the trust account. It didn’t take long for those dollars to be gone.</p>
<p>*That’s not how your math may work out. It might be you pay $20K for years One and Two (because your EFC is high) and then you pay much less for years Three and Four because your EFC has changed dramatically (ie, you have no more resources). *</p>
<p>Since it is likely that your EFC will be high while the trust money is used towards college, just because your EFC drops for years 3 and 4 does NOT mean that you’ll get more money at that point UNLESS your child will be going to one of the FEW schools that meet need.</p>
<p>At many schools that don’t meet need, if your EFC drops for years 3 & 4, you won’t get any more money. That could be shocking to find out at the end of your child’s sophomore year to find out that your EFC has dropped to $15k per year, but the school won’t give more money. </p>
<p>Be aware that some of the more generous schools use the “need” from the first year as a baseline and increases in aid during the later years can be hard to get. </p>
<p>So, plan accordingly otherwise you could find yourself short of money for those last couple of years of college. </p>
<p>Some strategies:</p>
<p>your child attends a school that is generous and meets 100% of need, so when the trust fund balance drops, your aid will increase. (Be sure to ask them if aid will increase as the trust fund level drops)</p>
<p>your child attends a schools where she receives a very large merit scholarship, so the balance can be paid with 1/4 of the trust for 4 years. </p>
<p>your child attends a school that has little aid to give and the trust fund pays for 1/4 of the cost and you pay the rest.</p>
<p>your child commutes to a local state school where 1/4 of the trust will pay (or mostly pay) for each year.</p>
<p>mbjngn -</p>
<p>Print out the FAFSA EFC formula <a href=“http://www.ifap.ed.gov/efcformulaguide/attachments/082511EFCFormulaGuide1213.pdf[/url]”>http://www.ifap.ed.gov/efcformulaguide/attachments/082511EFCFormulaGuide1213.pdf</a> and run all of your numbers through it. That will give you a better idea about which items most affect your FAFSA EFC. If your child is considering institutions that use the CSS Profile, you can use the calculators at the College Board website to get a guesstimate for the Profile results. However, you need to be aware that institutions that use the Profile can modify the formula as they see fit. For specifics about each institution’s modifications, you need to ask their financial aid offices.</p>