If You Need Another Reason for a Will: Your Grandchildren

If you die without a will, it you may be putting your grandchildren’s ability to get scholarships or student loans for college at risk. Here’s what happens:

You die without a will or creating an estate plan. Your assets are now under the care of New York State, which will make the decisions about how to distribute your assets. If you are the second to die, likely your children will inherit what is left in your estate after the cost of administration.

If your adult children were counting on scholarships, federal loans, work-study programs, grants or student aid to fund your grandchildren’s college expenses, their inheritance may make your grandchild ineligible for those funding options.

When the families fill out the FAFSA form (Free Application for Federal Student Aid), which is required by any family requesting any kind of financial assistance, they have to include all assets, including any inherited money.

Unless you’re leaving your grandchildren enough to pay for college, you’re putting their eligibility at risk.

Here’s a tale of a family who inherited enough money to pay for three grandchildren to go to college, but it is not the happy story you might expect.

A divorced single mother of three high school kids inherited $1 million. Sounds great? Except her kids were academically accomplished, and all were all on track to go to schools that cost more than $50,000 a year. Three kids, four years of college and after paying for everything, because they no longer qualified for any college funding, took more than a $600,000 bite out of the inheritance.

Had the $1 million been put into a trust, the money would not have been included as part of the household’s assets.

The daughter would have had access to the money if she needed it, but the kids would not have lost their eligibility for scholarship money or financial aid.

There are instances where people refuse their inheritances because of this very same fact pattern.

We are not in the business of recommending a one-size-fits-all trust. But in cases like this where there are grandchildren who will be going to college, a trust makes sense. So does having a will.

If you don’t have a will, or if you haven’t reviewed your will in four years, call me at 516-307-1236.