General Information
Parents and students who are beneficiaries of trusts are required to report the Net Present Value of their share of the trust as an asset when completing financial aid forms.
THERE ARE VERY FEW EXCEPTIONS TO THIS REQUIREMENT.
Q & A
How can we determine if we need to report a trust asset?
Any parent or student who is eligible to receive any part of the corpus of a trust is required to report the net present value of the expected distribution.
What is the corpus of a trust?
The corpus consists of the principle not the earnings of the trust. The trust agreement should clearly state who is eligible to receive both the income and the corpus of the trust. The trust agreement should also state when the distributions are to be made.
What is the net present value?
The net present value is what someone would be willing to pay you today for the right to receive your share of the trust at a future date.
How can we determine the net present value?
The trustees should be able to provide you with the net present value. If not, the website Finaid.Org provides a net present value calculator to determine how much you should report as a trust asset.
What if I have to wait a long time (30+ years) to receive my share of the trust?
A long delay in receiving your share of the trust may occur when you are the beneficiary of a generation skipping trust. In this type of trust one or more individuals in a prior generation must pass away before you are eligible to receive your share of the trust. When the student is the beneficiary of a generation skipping trust, the potential distribution may be 35-40 years in the future. Unless the trust is unusually large, we recommend you ask the financial aid office to exercise professional judgment to exclude the value of the trust.
What if I only receive income from the trust?
If you are only entitled to receive income from a trust, you will not have a trust asset to report.
