When a couple is getting a divorce, there are a myriad of things to discuss and decide, ranging from where each is going to live to a whole host of financial issues such as spousal maintenance, child support, responsibility for existing debts, tax issues and property division. One issue that all too often seems to be neglected is planning for their minor children's college future.
Even if, as a couple, they previously established a college saving account for each child, maintaining and managing it, and seeing to it that it grows, this will take some commitment and communication going forward. The best way to approach it is to discuss the entire question during the process of settlement negotiations.
A specified kind of account, known as a 529 plan, provides for tax advantages for investments aimed at paying for higher education. If such an account has been established or is newly opened, how much money will be going into it over time and how much will each parent pay into it?
Funds in such an account can be frozen, in order to prevent the possibility that a parent might spend the funds in it for noneducational purposes, like a car payment or going on vacation. There are also investment decisions to contemplate concerning how the money in the fund is to be best invested for the highest return, while also considering the prudence of the investments made and the amount of risk of loss that might be involved in particular investments.
All these things have to be planned and consciously sorted out. They don't just happen automatically. While college may seem a long way off to parents with small children, the time their children are actually going to matriculate will arrive sooner than they know it. Having an experienced divorce lawyer who knows how to best negotiate this issue into a divorce settlement is essential.
Source: USNews.com, "Discuss College Savings During Divorce Process" Retna Gobel, Apr. 29, 2013