When planning for the good of loved ones who are minors, you may be focused on protecting and preserving their inheritance from squandering, divorces, lawsuits and bankruptcies. But did you know your generosity to them (or their parents) also may threaten their college education ... by complicating financial aid?
As parents of the college-bound or soon to be college-bound understand to a dizzying degree, financial aid is a difficult calculus of have and have not.
Unfortunately, the types of income and assets a parent or a parent's "student" receive will have dramatic influences both on the availability of financial aid and the ease with which it is attained.
In other words, sometimes an inheritance can be a threat to financial aid and the college degree of a young person, especially if there are family issues at play in Overland Park or elsewhere.
Enter the story of “Robin” as relayed in a recent Forbes article titled “An Inheritance That Could Foul Financial Aid.” Truth be told, the story of Robin and the potential difficulties of her children with financial aid is as much a story of family disagreement as it is of grumpy institutional curmudgeonry.
Nevertheless, it is worth considering Robin’s story of family disagreement and the details a FAFSA will sniff out, even if they are not available and true.
What is even more important is to understand that different assets, inheritances and gifts will have a serious effect on financial aid, taxation and/or financial viability for higher education. If your goal is to financially assist your loved ones through college, then there are some very specific types of gifts to consider without jeopardizing financial aid in the process. [Spoiler alert: Look into Section 529 Plans!]
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Forbes (November 18, 2013) “An Inheritance That Could Foul Financial Aid”