Every parent wants their child to have more opportunities in life than they did when they were growing up, and for many, that means planning for college. Parents fund their child’s college tuition in several different ways, but when the couple decides to divorce, it can be complicated determining what to do with the college fund. As experienced child custody lawyer’s, we can help.
What Are Your Options?
If you have opened a 529 savings account for your child’s tuition, you and your ex-spouse are going to have to decide what to do with it. You have a few options. One is to assume individual control of the account. If you do this, decisions regarding the fund can only be made by you. You will need to come to a mutual agreement with your spouse on who takes over the fund. Often, it makes the most sense for the noncustodial parent to take over the fund, because that way the 529 will not be considered on your child’s FAFSA, which can ease the burden of college tuition.
Other options for 529s include freezing the account or splitting it. Freezing the account means that no more deposits can be made and that the money in the account can only be used for the child’s education. This measure can help protect the money from an untrustworthy ex-spouse. Splitting the account is another option if the parents do not wish to relinquish full financial control of the college fund to one parent, and entails obtaining a judge’s order to separate the 529 into two new 529s.
Contact a Greenwood Village Child Custody Lawyer for Help
You will also have to consider the tax implications of your divorce. Whichever spouse claims the child as a dependent will be eligible for college credits given out by the IRS. Depending on the salary of the custodial parent, these tax credits can fluctuate, with higher-earning parents receiving lower or nonexistent tax credits the higher their salary is.