Photo of Professionals at Weinberg, Kaplan & Smith, P.A.
Photo of Professionals at Weinberg, Kaplan & Smith, P.A.

Don’t let divorce upend your college savings goals for your child

On Behalf of | Oct 11, 2024 | High Asset Divorce

You and your soon-to-be ex may not have agreed on much lately. However, you likely agree that you want your child to have the best education you can give them.

Unfortunately, college savings, in whatever form it takes, sometimes ends up being simply another asset that’s fought over in divorce. You can avoid that by taking steps to preserve what you’ve set aside thus far – whether it’s stocks and other investment instruments, savings bonds, a prepaid tuition plan or a savings account – and continue to grow the savings (together or separately) for your child’s future.

Dealing with a 529 college savings plan in divorce

Tax-advantaged 529 plans are a popular way for parents to save for their child’s college education. Depending on your income, the contributions may be tax deductible. Distributions (withdrawals) aren’t taxed as long as they’re used for qualified education expenses.

Because a 529 plan can only have one owner (with the child as the beneficiary), if it’s in your spouse’s name, they can potentially close the account and keep the funds (if they’re willing to pay the tax penalty for not using them for one of the designated purposes.) That’s why it’s wise to put an agreement that requires them to get your approval for any distributions and beneficiary changes and to give you access to statements. 

That’s one way to safeguard your child’s college savings (and the money you’ve contributed to it) as you divorce. There are many others. Whether your child is still in grade school or is starting to look at colleges, you’ll likely want to make those savings a priority in your negotiations with your co-parent. With experienced legal guidance, you can work to do what’s best for your child.  

 

 

 

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