I have a friend whose mother passed away two years ago, and left her some money from an insurance policy. The money is currently in trust for her with her grandmother as the trustee. Does she need to claim this as an asset on her FAFSA? She is unable to touch it until she turns 21. — Karen A. In most cases the beneficiary of a trust must report the trust as an asset on the Free Application for Federal Student Aid (FAFSA). The FAFSA instructions, for example, state that "Investments include real estate (do not include the home you live in), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc." The beneficiary must report the trust as an asset even if the beneficiary's access to the trust has been restricted. The only exception is when the restrictions on access to the trust are involuntary, such as a trust that is restricted by court order. Such a trust would not be reported as an asset on the FAFSA. All other trust funds must be reported as an asset on the FAFSA. If the creator of a trust placed restrictions on access to the trust by the beneficiary, such restrictions are considered voluntary. The restrictions may be involuntary from the perspective of the beneficiary, but the restrictions were established voluntarily when the donor created the trust. Examples of trusts with voluntary restrictions on access to the trust include a Crummey Trust and a Section 2503(c) Minor's Trust. After all, if people could shelter money from need analysis simply by placing voluntary restrictions on access to the money, the need analysis process would be ineffective at assessing the family's ability to pay. A trust is still a source of financial strength, regardless of whether access to the trust is restricted or not. Unfortunately, restrictions on access to the trust can backfire, reducing or eliminating the student's eligibility for need-based financial aid. An asset in the student's name will reduce eligibility for need-based aid by 20% of the value of the trust. Moreover, since the beneficiary cannot liquidate the trust, the trust will continue in existence, affecting eligibility for need-based aid every year. However, sometimes trusts aren't as restricted as one might believe. The trust document may allow the trustee to spend the money for the benefit of the beneficiary. Some states have laws that allow trustees to spend trust funds for the medical care and education of the beneficiary even if access to the trust is restricted.