If your kids are very young when you divorce, paying for their college education may not be uppermost in your mind at this time. However, divorce can have a devastating impact on their goals if parents don't include college savings provisions in their divorce agreements.
Even in-state public university expenses (including tuition, room and board and other costs) run an average of almost $21,000 a year currently. Private colleges, of course, can be significantly more costly.
Divorce impacts parents' financial situations because they no longer have the cost savings of things like sharing a home or filing joint tax returns. However, it shouldn't destroy your kids' dreams of going to the best school they can get into, whether it's nearby Brown or somewhere across the country like Stanford.
In Rhode Island, like many states, child support obligations don't specifically include college and end when a child is between 18 and 19, However, parents can save for their kids' college education with a tax-free 529 plan.
If you and your spouse already have a 529 plan in place when you divorce, you'll need to determine how that will be handled and codify that in the divorce agreement. Since these plans are owned by the parents on behalf of their kids, some divorcing parents split the savings into two separate plans. Others keep the one plan that they both have access to. What you decide to do will depend on the level of trust you have in your co-parent not to take money from the plan for his or her own purposes.
When your child is ready to start applying to colleges, you'll want to look at ways that the two of you can help him or her get the greatest amount of financial aid possible from the Free Application for Federal Student Aid (FAFSA). There are strategies involving which parent has custody and which one declares the child as a dependent for tax purposes.
In addition to the legal guidance provided by your Rhode Island family law attorney, it's wise to seek the help of a certified financial planner or other financial advisor. With sound legal and financial advice, you can reduce the impact of your divorce on your kids' future.
Source: CNBC, "How to keep your divorce from sabotaging your children's college education," Lorie Konish, accessed June 13, 2018