On behalf of Lake Toback Attorneys
In Illinois, planning for the future of the children and their financial security is a part of the divorce process. One aspect of this includes saving for college. Parents should communicate with each other to arrive at a divorce settlement.
Parents will should make decisions about 529 plans, which are investment accounts with a number of tax advantages that can be used for college. They may decide to freeze the account or split the account and determine what amount each will put into the account.
While freezing a 529 account means that no money can be withdrawn, no money can be added either. The money in the account must be used for the education of the child on the account. Usually, account owners can take money out for any reason they want although they would be penalized. Freezing the account prevents either parent from spending the money or from using it to pay for another child’s education.
After the child finishes school, money might be left. The parents will decide how that money should be spent. One of them could go back to school or a sibling could use the monies.
The courts sometimes order 529 plans to be split so that each parent owns a new plan. That person is then responsible for making investment decisions regarding the account. The court can also determine what portion of school each parent must fund, but the parent will decide specifics regarding investments.
A child?????????s college savings funds can be impacted by a divorce. Family attorneys in Illinois might be able to help parents develop new education plans for their children and work for the best interests of the children.
Source: US News & World Report, “Discuss College Savings During Divorce Process“, REYNA GOBEL, April 29, 2013
Rethinking college funds during a marital split