Family Law Attorney Explains What Happens To A Child's 529 Plan in a Florida Divorce
Many divorcing couples have a significant amount of assets invested in
their children’s 529 college savings plans. 529 plans offer a lot
of benefits, including tax savings, which can be very attractive to couples
that have some extra money to save for future college expenses.
If a couple jointly opened the 529 plan, as part of the divorce process they will have to decide which parent will assume individual control over the college fund account after the divorce. If one parent becomes the sole owner, he or she is the only person who can make decisions about the use of account funds. If the couple cannot agree which parent will take control over the funds, they may decide to freeze the account or split the account.
As part of the divorce process, it’s important to speak with an advisor about which parent should take control of those funds. Although it may be tempting to fight for control in order to score a victory over your spouse, it’s more important to make the decision based on other factors. Many experts recommend that the account be placed under the control of the noncustodial parent. A noncustodial parent’s assets and income are not included on the FAFSA, which may greatly affect the student’s ability to receive financial aid.
However, just because one parent is placed in control of the account doesn’t mean that the other parent has no access to the account. The other parent should be designated as an authorized user so that he or she can see what’s going on in the account. That parent should also be designated as the successor owner, in case the parent who owns the account dies.
Posted By
Dale L. Bernstein, Chartered Law Office
Categories:
If a couple jointly opened the 529 plan, as part of the divorce process they will have to decide which parent will assume individual control over the college fund account after the divorce. If one parent becomes the sole owner, he or she is the only person who can make decisions about the use of account funds. If the couple cannot agree which parent will take control over the funds, they may decide to freeze the account or split the account.
As part of the divorce process, it’s important to speak with an advisor about which parent should take control of those funds. Although it may be tempting to fight for control in order to score a victory over your spouse, it’s more important to make the decision based on other factors. Many experts recommend that the account be placed under the control of the noncustodial parent. A noncustodial parent’s assets and income are not included on the FAFSA, which may greatly affect the student’s ability to receive financial aid.
However, just because one parent is placed in control of the account doesn’t mean that the other parent has no access to the account. The other parent should be designated as an authorized user so that he or she can see what’s going on in the account. That parent should also be designated as the successor owner, in case the parent who owns the account dies.