On behalf of The Law Office of Gustavo E. Frances, P.A.
Setting aside funding for a child’s education is a top priority for many Florida parents. However, when divorce changes the structure of a family, college savings accounts are often overlooked during the negotiation process. It is important to address these matters before a settlement is reached so that children are able to access the money that has been saved for college expenses when the time comes.
Many families choose a 529 plan as a college savings investment vehicle. These plans are incredibly flexible, which is appealing to many parents. However, that same flexibility can lead to problems after a divorce. For example, the terms of most 529 plans allow the “owner” of the plan to make changes as needed, including changing the named beneficiary. That means that if the owner remarries, he or she could change the beneficiary to a new stepchild.
It is not enough to simply assume that the custodial parent will ensure that the funds saved in a 529 account will be used for the intended purpose. Parents who are going through a divorce should take steps to protect those funds so that their shared child or children will be able to use those funds to pursue higher education. One option is to divide the savings into two separate 529 plans, allowing each parent to have a measure of control over the investments. Another option is to liquidate the 529 plan and place the accumulated funds in an education trust.
The best course of action will differ from one Florida family to another, but there is a solution available to suit virtually any set of needs. When it comes to providing for a child’s education, no measure of protection should be overlooked. The flexibility of 529 savings accounts opens the door to potential misuse of the funds held within. Including this asset within the scope of property division divorce negotiations is a solid financial planning move.
Forbes, “How To Protect Your College Savings During A Divorce“, Brian Boswell, Aug. 28, 2016