Making decisions about property and financial arrangements in a divorce are often stressful. Child support, alimony and other expenses take precedent, but putting additional emphasis on your child’s future college plans can ensure that money will be available when it’s needed. A 529 college savings plan allows parents, grandparents, friends and relatives to contribute after tax dollars to a savings account intended to finance a child’s future college costs. The money invested in the account is tax-deferred and offers parents a deduction at tax time. The problem with a 529 plan in a divorce situation is that they are often not clearly outlined, which can lead to significant problems in how the money is used.
The 529 plan can only have one owner. Anyone can contribute to the fund, but the owner has control over the money and how or when it is used. Towson divorce lawyers at Huesman, Jones & Miles suggest that parents split ownership of the 529 account, having two accounts, each with its own parent as owner. This arrangement can benefit both parents as they can contribute and control their portion of the child’s tuition savings plan. Spouses can also request quarterly updates on the account to ensure that their ex-spouse is making agreed-upon deposits and will track any withdrawals from the account.
As with all divorce declarations, your lawyer needs to outline the purpose and logistics of the account specifically to avoid any surprises down the road. Clearly outlining the language of the 529 plan will ensure that monetary resources are available when your child is ready to begin college. Ownership rights and stipulations on the 529 plan that specify how the money can be used will guarantee that your child’s future college education goals are fulfilled. Successor owners, or beneficiaries to the 529 plan should also be clearly documented. If something happened to the owner of the account, then the successor owner would take control over the fund.
Even though the 529 plan will provide for college costs when the time arrives, it may not cover all expenses. At the time of the divorce proceedings, parents need to focus on what financial responsibility they will assume in the future while their child attends college. Couples that spell out these responsibilities early will be better suited to provide for the child’s needs when the time arrives.
Towson Divorce Lawyers at Huesman, Miles & Jones, LLC Assist Parents with 529 College Savings Plans
The experienced Towson divorce lawyers at Huesman, Miles & Jones, LLC have been helping divorcing couples establish successful college savings plans for their children for over 30 years. If you or someone you know is considering a divorce, contact our team of reputable and highly-skilled Maryland child support attorneys at 443-589-0150 or complete our online contact form to schedule a consultation today.
Our offices are conveniently located in Hunt Valley and Towson, Maryland allowing us to serve clients throughout Hunt Valley, including Cockeysville, Lutherville Timonium, Upper Falls, Phoenix, Riderwood, Sparks Glencoe, Towson, Brooklandville, Butler, Stevenson, Glyndon, Monkton, Reisterstown, Pikesville, Ownings Mills, Parkville, Boring, Glen Am, Baldwin, Upperco, Hydes and Baltimore County.