Irrevocable Trusts impact on FA?

[Anonymous]

We currently are FA family with 2 kids in private MS. My mom who I was estranged with recently passed and listed my 2 kids - her only grandkids as the only beneficiaries to collect the fund at age 25. The money is not for us - is for them upon turning age 25 but with the exception of medical, educational and well being care, funds are able to be withdrawn upon the discretion of a 3rd party Fiduciary.

From what I've read online, irrevocable trust assets will impact FA because it's seen as family money. However, the 2 Trust management 3rd party orgs I've spoken with sounded like FA is something that can still work for us. I wasn't sure if they were just saying that as a sales technique for us to sign on with them or if anyone has had experience with this, would love to know.

We aren't a well to do family and again, the money will be held by a 3rd party to determine funds for our kids but for education, it could help us quite a bit. Wasn't sure however if we used it, we'd use every penny!

[Anonymous]

You answered your own question:

" exception of medical, educational and well being care, funds are able to be withdrawn"

private school/college sound like educational expenses to me.

[Anonymous]

There is no way for the trust money to show up on your tax bill; it is separate from your net worth.

The trust management folks you spoke to are correct.

[Anonymous]

Anonymous wrote:We currently are FA family with 2 kids in private MS. My mom who I was estranged with recently passed and listed my 2 kids - her only grandkids as the only beneficiaries to collect the fund at age 25. The money is not for us - is for them upon turning age 25 but with the exception of medical, educational and well being care, funds are able to be withdrawn upon the discretion of a 3rd party Fiduciary.

From what I've read online, irrevocable trust assets will impact FA because it's seen as family money. However, the 2 Trust management 3rd party orgs I've spoken with sounded like FA is something that can still work for us. I wasn't sure if they were just saying that as a sales technique for us to sign on with them or if anyone has had experience with this, would love to know.

We aren't a well to do family and again, the money will be held by a 3rd party to determine funds for our kids but for education, it could help us quite a bit. Wasn't sure however if we used it, we'd use every penny!

How much?

[Anonymous]

The private schools are 100k+ for a year of tuition for both. The Fund totals about $1M currently for each kid. Obviously want to grow and keep for for them till they reach age 25 to take. At $100k a year for 6 more years and 4 more years each not incl college, that just seems a ton of spend! Our FA provides for 40% right now of the tuition total.

The Trust fund people seem to feel that we can keep FA and supplement a bit more via fund if we wanted to help our finances.

I wasn't sure if FA negates our opportunity to do that in total?

[Anonymous]

If each out your children have $1M - do you think they should get financial aid?

[Anonymous]

Anonymous wrote:If each out your children have $1M - do you think they should get financial aid?

This, 100% this. Why should people with less money than you kids pay for your kids? Just stop it. If you don't want to spend the money on private, then take them out of private. Don't steal that money from hardworking families who are all paying for your kids' financial aid.

[Anonymous]

Anonymous wrote:There is no way for the trust money to show up on your tax bill; it is separate from your net worth.

The trust management folks you spoke to are correct.

So you are saying OP can lie and get away with it?

[Anonymous]

How did you find out about the trusts if you are estranged?

Or are you in communication but not close and your mother told you?

I say this as a person who has had random friends of my mother tell me that she has money to pass on but she hasn’t said a word to me and has had ample opportunity.

If she’s never shown you documents and the statements behind them, assume it’s just Sabre rattling and don’t give it another thought.

[Anonymous]

OP, your kids are millionaires. Think back to a time no so long ago when they weren’t and were getting FA. What would you have thought about them being denied FA because the school was giving that FA to a millionaire? The FA pot is not bottomless. You would be taking money from a kid who needs it more than your kids do. How do feel about that? How would you have felt six months ago?

[Anonymous]

Anonymous wrote:How did you find out about the trusts if you are estranged?

Or are you in communication but not close and your mother told you?

I say this as a person who has had random friends of my mother tell me that she has money to pass on but she hasn’t said a word to me and has had ample opportunity.

If she’s never shown you documents and the statements behind them, assume it’s just Sabre rattling and don’t give it another thought.

OP’s mother died.

[Anonymous]

It sounds like you should use it vs. financial aid. It absolutely should be counted.

[Anonymous]

I love how you want the school financial aid fund to pay your kids tuition and your kids are millionaires.

[Anonymous]

Doesn’t the FAFSA or school financial aid form ask about an educational trust or assets like this? Of course the OP can omit this information if asked directly about it and continue to draw FA in lieu of drawing it from the trust but what I would say on the matter is that outside of it being ethically and morally wrong, I think of it as karmically burdensome. I’ve often wondered when not so great things have happened to me if I am meeting my karma. Everyone does things that are morally in a gray zone but this isn’t really gray as you make it out to be - it’s black and white. You may not be convinced of that but I wouldn’t be surprised if you do what you’re trying to do that you will quite literally pay for it somehow.

[Anonymous]

The FA form will ask about this but if your kids don't have access to these funds before the age of 25 (did I read that right?!) then no, it should not count against FA. 1 million is not a lot of money, they need to invest those funds so they have a comfortable adulthood like OPs mom wanted for them.