Structuring Divorce Settlements to Benefit College Funding
Any college or university that awards federal student aid must require applicants to complete the Free Application for Student Aid (FAFSA). There is a relatively small number of institutions that may require an additional aid form known as the CSS Profile. While married, the incomes for both spouses are factored into determining eligibility. However, if the parents are legally separated or if they live in separate households as if they were unmarried, then only the income of the parent with whom the student lived the greatest number of overnights over the past 12 months is considered for purposes of FAFSA eligibility. Furthermore, certain assets are given preferential treatment and are not counted when determining FAFSA eligibility. Examples of assets that are not counted include a family-owned small business, home equity, life insurance cash value, as well as IRA accounts and qualified retirement plans such as 401ks and 403bs. However, contributions made to an IRA ...