Setting Up a 529 Account For College During Divorce

 Posted on June 12, 2013 in Divorce

In the throes of divorce, planning for the future may seem the farthest thing from your mind, especially when it involves planning for a future you would otherwise have spent together. And yet planning for your kid’s college in the midst of a divorce is an important thing to keep in mind. Just because you’re getting separated doesn’t eradicate the need for college savings and cooperation when it comes to your children, no matter how difficult that may be. Some couples decide to continue to save together for their kids’ college; others each decide to put what they can (or a pre-specified amount) aside and come together only to write the check later. “Saving for college after a divorce is a process of communication,” according to US News and World Report. “However, the communication is easier if a framework is set up during the divorce settlement.”  This framework could have many different structures, and it should be considered with both your and your ex’s divorce lawyer at the time of divorce. One such framework “could include freezing the current 529 plan account (a tax-advantaged investment account used for higher education), splitting 529 plan accounts when needed and deciding what proportion each parent will pay toward their children’s education,” according to US News and World Report. This also ensures that neither ex will be able to have access to the 529 account because no more deposits are being made, meaning that the only person who will have access to the account is the designated child. “Freezing the account would also prevent a parent from using account funds to pay for the education of child from a new marriage,” according to US News and World Report. If it seems risky to leave the investment decisions up to only one parent—the account owner—after divorce, the other option is to have the judge split the existing account 50/50. A qualified family law attorney can assist this decision, and many others. If you or someone you know is considering divorce, don’t go through it alone. Contact a dedicated Illinois divorce lawyer today.

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