When you and your partner decide that divorce is the best option, there will naturally be a number of questions to consider that you may not have planned for. If you have children, you will likely be negotiating custody arrangements. Details involving property division–such as college funds–will affect children, too. Here is what you should know about protecting college savings in the midst of a separation.
Here is what you should know about protecting college savings in the midst of a separation
Save in a specialized account
Keeping college funds in a generic savings account can prove problematic if your ex attempts to claim such funds during property division. According to the Arizona Commission for Postsecondary Education, a 529 plan can provide tax benefits and ensure the reservation of all funds for a college education. If you saved in such an account, it will typically be easier to protect its funds in the event of a divorce.
Specify the beneficiary
Regardless of what kind of account contains your kids’ college savings, you should make it clear in your divorce’s separation agreement that your children are to be the sole beneficiaries. Without such a stipulation, your ex could feasibly claim the funds as their own. A separation agreement, however, will give you the ability to protect the savings until your children are ready to attend college.
Prepare for later negotiation
There are a number of details that you may need to negotiate when your child enters college if you and your ex both retain ownership of the savings account. It is best to assume that you will revisit the terms of your child’s savings later, regardless of what is specific in your separation agreement. Approaching this collaboratively rather than combatively will best serve your child’s interests and educational future.
College savings accounts are just one of many complex details you must handle in a divorce. Hiring a lawyer can help you ensure such issues are dealt with effectively.