Grandma put aside a bunch of money for daughter's college costs a few years ago by setting up an UTMA with Grandma as custodian and invested in mutual funds.
Daughter is HS senior and we're doing CSS and (soon) FAFSA. It appears that FAFSA now treats 529 plan in an UTMA as parent asset - so was planning to move UTMA funds into a 529.
BUT... now I see that the CSS form wants to treat 529 within UTMA as Student asset (20% assessment).
Instructions from the CSS Profile form:
SA-110A
Use the worksheet to answer how much your (and your spouse's, if married) investments are worth today. Do not include the value of your home, other real estate, business, or farm. If you, the student, own one or more of those assets, report the value in SA-120 - home, SA-140 - other real estate, and SA-150 - business and/or farm. If you are required to provide parent data, assets that are held in Section 529 prepaid tuition or college savings plans or Coverdell savings accounts should be listed as parent assets in PA-120. If parent data are not required, report these assets here. If you (and your spouse) have assets owned jointly with someone else, give only your (and your spouse's) portion of the assets. If you have a 529 plan as part of a Uniform Gift to Minors Act (UGMA) account or Uniform Transfer to Minors Act (UTMA) account or that was funded from assets from an UGMA/UTMA, it is considered a student asset and should be reported here.
Only enter your assets in this question; don't include your parents' assets.
So it seems the past "loophole" of moving UTMA funds into a 529 plan to move them from a student asset to a parent asset has been closed by the CSS profile (and the private colleges that use CSS for financial aid determination).
Questions:
1. (Joe) were you aware of this UTMA-owned 529 plan treatment by the CSS?
2. Any ideas as to how to get around it?
(wild idea: Have Grandma open a 529 plan for small amount ($500) in Grandma's name with granddaughter as beneficiary. Then have UTMA custodian (also Grandma) invest UTMA funds in same 529 account. But looks like this still wouldn't get around CSS instructions posted above - "funded from assets from an UTMA".)
Daughter is planning to go on to med school and Grandma is hoping to preserve some/most of the gifted UTMA assets until then.