You should contact Mike Velasco of Red Oak College Planning about the
financial aid question. He was very helpful to my husband and me when
dealing with financial aid issues for our children. What counts, what
doesn't count as an asset for financial aid purposes. I met him through
an ICLE seminar at which he presented.
He can be contacted at:
[email protected]or 908 758 1322
Original Message------
Colleagues -
Client is receiving a significant amount from life insurance as a result of the passing of his adult child. She was a solider and thus had the policy (dad never took insurance policy on his child). He's, obviously, extremely ambivalent about "making money" from his child's death. He has five (5) other kids, and after talking to him at length, he is okay with the idea of having the money put into a college fund for the other kids.
I talked to an Estates & Trusts attorney, and setting this up as a trust account would have a lot of complications, including the need to provide annual accountings and file tax returns. Client would prefer to avoid that (and the associated legal fees and taxes).
In view of what his goals are, I'm thinking that the funds could be put into a separate account and a consent order entered into restricting access to them without forming a formal trust subject to all the accounting and taxation rules. He's divorced, so a post-judgment consent order could be filed along the lines of "Plaintiff shall establish an investment account with XYZ Bank for the benefit of [list all 5 children] into which the proceeds from X's life insurance policy shall be deposited. A constructive trust is hereby imposed over the proceeds. The funds shall be utilized for each child's education, with each child entitled to 20% of the proceeds at the time of withdrawal. Withdrawals from the account shall require the dual signature of plaintiff and the child at issue. In the event any child attains the age of 30 and has not received 20% of the proceeds, those funds shall be dispersed to the child at that time." It should be noted that his ex has...some issues...and would get her hands on the money and use it herself is it were even remotely possible for her to do so - I'll spare the details, but they're horrific, including setting up a GoFundMe account without authorization (they were estranged and she's livid she wasn't listed as a beneficiary) and she's now playing games with trying to keep the $5K raised. It needs to be protected from her getting anywhere near the money. I'm not sure how that would figure in (if at all), but am concerned about it.
Has anyone ever done something like this? It would be a constructive trust, correct? Any benefit from doing this as a consent order and providing a copy of the order to the bank, or is a written agreement just as effective? Would it still "count" as an asset if plaintiff ever needed to declare bankruptcy? Would it count as an asset for college financial aid? Could it say the child at issue would have no interest in the funds until after all financial aid has been applied for and thus the kids would not have to reference it? (I get nervous about what appears to be a sometimes murky line between "financial planning" and fraud).
Thanks,
<x-sigsep>
David Perry Davis, Esq.
------------------------------------------
www.FamilyLawNJ.pro
------------------------------------------
112 West Franklin Avenue
Pennington, NJ 08534
Voice: 609-737-2222
Fax: 609-737-3222
</x-sigsep>