What Happens to a College Savings Account for My Kids in a Divorce?
Do you and your spouse share one or more minor children from your marriage? If so, you may have already started saving for your child’s college education. Parents can create college savings accounts or funds in many different ways. Some parents create a Florida 529 Plan or a Florida Prepaid Plan, while others establish a general savings account or money market account into which funds are deposited. If you do have any type of savings or account intended for your child’s college education, how will these funds be treated in your divorce?
In other words, are these marital assets that can be distributed according to the requirements of equitable distribution? Or do these funds belong to your child? These questions can be complicated depending on factors specific to the account or accounts you have created and how they have been funded. Consider the following information from our Port St. Lucie divorce and property division lawyers.
529 and Prepaid Plans Versus Other Savings Accounts
If you or your spouse are the account owner — meaning that you set up the account — of a 529 Plan or a Florida Prepaid Plan, even though one of the spouses may be the official owner of the account, these funds cannot be withdrawn and used for just anything. Rather, they must be used according to the terms of the plan: to pay for tuition and fees at a Florida public college or university (with a Florida Prepaid Plan) or to cover educational expenses more broadly (a 529 Plan).
While these funds cannot be used for just anything, it is still important to make clear in your divorce settlement that the funds are to be used for your child’s education. While they are technically marital assets (unless the account was funded by one spouse’s non-marital or separate assets alone), it is often easiest to address how these will be used for the child as part of a marital settlement.
A general savings account that is not a 529 Plan does not have to be used for educational expenses of any type, and either or both of the parents may decide it makes more sense to have these funds available to them now rather than planning for their child’s college education. These types of funds that do not have a specific tax demarcation like a 529 Plan will be classified either as marital or non-marital property (or may be commingled) and will be distributed according to equitable distribution through a marital settlement or by the court. The funds can still be used for a child’s college education, but the process can be complicated.
Contact a Port St. Lucie Divorce Lawyer Today for Assistance with the Distribution of Assets and Your Child’s College Savings Funds
If you have any questions about how college or other educational savings accounts that you and your spouse created for your child or children will be handled in your divorce, it is essential to seek legal assistance. For the reasons discussed above, it is important to work with a lawyer to identify ownership of these assets and how and when they can be spent, especially when funds are in a standard savings or money market account that does not have the limitations associated with a 529 Plan or Florida Prepaid Plan. An experienced Port St. Lucie family law attorney at Baginski Brandt & Brandt can speak with you today to learn more about the assets at issue and to discuss options with you as you move forward with your Florida divorce.
Source:
floridashines.org/savings-and-prepaid-plans
