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I have kept my sons investments in my name and have paid taxes at my rate as appropriate. My son is a junior in college and does not currently receive financial aid. He plans on going on for a masters. Most grad school students receive financial aid. I would transfer his assets to his own name but I am afraid they might be used against him for financial aid. He has significant assets with large capital gains. Any thoughts?

From a tax perspective, you're acting as your son's nominee and paying tax you don't have to on income that isn't yours. Assuming that your tax rate is at least as high as your son's, your not wrongfully saving any tax money, but technically you should be passing the income along to him on 1099's so he can report his own income. Simpler yet would be to put his money in his same.

I have no idea how the higher education financial aid process works nowadays, but if you hide assets that would make a difference in the outcome, some, myself included, would call it fraud. I suggest a visit to the Paying for College board, where there are lots of Fools dealing with these issues.

Phil Marti
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