What Will Happen to Your Child's College Fund After Divorce?

 Posted on April 17, 2019 in Child Support

Divorce can disrupt the financial plans from your marriage, including savings you have accumulated for your child’s college expenses. If you have been making regular contributions to a college fund, you may worry about how you will continue to afford them on your individual income while also supporting yourself and your child. You should discuss your college savings plan with your spouse during your divorce negotiations, including who will control any existing savings and how to ensure that the money goes towards your child.

Types of Plans

Savings accounts from your marriage, such as a retirement plan, are considered marital assets because they are funded with marital income. Even if you keep control of the entire account after your divorce, you may need to compensate your spouse for half of the value of the account. A court may exclude your college savings account from your marital property if it classifies the account as a fund set aside for your children. The best way to do this is by creating a plan that is meant for college savings, such as a:

• 529 savings plan;
• Custodial 529;
• Coverdell Education Savings Account; or
• Trust in your child’s name.

Plan Control

If you created the college savings account before your divorce, you will need to decide which parent will be in charge of the account moving forward. Usually, one parent assumes total control of the account, though you can split the account and each receive half of its value. You can include conditions in your divorce agreement stating that:

• Both parents will continue to contribute to the college savings plan;
• The money cannot be used for anything other than the child’s college expenses; and
• Both parents can view the account to see if it is being used properly.

If safeguards are not put in place, the parent with control of the account may be able to withdraw money to spend on whatever he or she wants.

Child Support

There are other ways to share the cost of your child’s college expenses if your savings will not cover the cost. Illinois allows you to extend child support payments after your child has turned 18 in order to pay for college. Even with a college savings plan, child support may help cover your child’s living expenses. There are conditions for receiving child support for college, such as being a full-time student and maintaining good academic standing. The support ends when the student graduates with a bachelor’s degree or turns 23 years old.

Contact a St. Charles Divorce Attorney

Your divorce will not prevent you from continuing to plan for your child’s future. A Kane County divorce lawyer at Goostree Law Group can advise you on how to treat your child’s college savings plan during your divorce. To schedule a free consultation, call 630-584-4800.

Source:

https://www.savingforcollege.com/article/divorce-can-derail-college-savings