There are always many things to consider during a divorce. Property division in a New Jersey divorce could potentially impact your child’s college savings, which might be disastrous. However, you can take steps to protect your child’s future education.
Keep an open line of communication with your spouse
Even while the divorce is ongoing and you have to worry about property division and other important matters, you should remain in communication with your spouse. Check your emotions at the door and stay logical. You may want to bring up the subject of your child’s college savings and discuss who is going to pay what.
Know who pays what toward the college fund
In some cases, you can decide with your spouse that one of you is going to pay money toward your child’s college fund, which could affect their payments related to the divorce. For example, if you and your ex decide they will pay toward the college fund, you might balance that by also deciding to reduce the amount of alimony they would pay you.
A parenting agreement can help protect a college fund. Within the agreement, you can have instructions that determine who pays toward your child’s college fund. Often, a 529 plan is used to hold money for the college fund. Although a 529 plan is often viewed as marital property during a divorce and, therefore, subject to property division, one parent may still be able to access the funds without the other’s permission. However, with a parenting agreement in place, you can agree to keep whatever money is in the 529 plan so that your child can benefit from it once they attend college.
Unfortunately, if you and your spouse cannot come to an agreement about the college fund, one party might withdraw funds at any point. If too much money is withdrawn or at the wrong time, it can result in your child suffering unexpected tax consequences later on when they need the funds to pay for college-related expenses.
Being responsible and coming to an agreement with your spouse is perhaps the best way to protect your child’s college fund. When you agree to retain the fund for your child’s use, it can save a lot of headaches.