But the rule can seem harsh to stepparents who have moved into a new household just as college looms after having saved religiously for years to send their own kids to the school of their choice. Mont. These might include a new primary residence, or life insurance or annuities. Giving assets to children who no longer live with you will guarantee that the kids get the money. One way to accomplish that is to set up irrevocable trusts in their names. But owning the assets may hurt the child's own chances for financial aid.
Many states now offer tax-deferred savings programs for people funding a child's education.
While putting money into one of these plans might seem to be a way to shift assets, the person who opens the account is still the owner. Many states won't let the child open the account, although a grandparent can. The proceeds are taxed at the child's rate when they are used for college. The Stragand twins, now juniors, are on a first-name basis with their aid administrator. Two years ago, their mom and stepfather divorced.