We all intend for the inheritance we leave behind to be for good, not to cause problems. 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. While you are at it, however, be sure you do not jeopardize their eligibility for college financial assistance in the process.
Sometimes too much inheritance all at once is a threat to moral development, it’s true, but sometimes a gift can threaten a college education by complicating financial aid.
As parents of the college-bound understand to a dizzying degree, financial aid is a difficult calculus of have and have not. It is often an entirely necessary salvation. Unfortunately, the types of income a parent or a student of a parent 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.
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.
Reference: Forbes (November 18, 2013) “An Inheritance That Could Foul Financial Aid”