With the high cost of college in Rhode Island and throughout the country, many parents decide to start budgeting for college expenses early. Things can get a little complicated, though, when parents get a divorce before their child graduates from high school. If a child hasn’t tapped into their college savings plans yet, these accounts will be treated as marital assets in a divorce.
Dividing college savings plans
You may have multiple college savings assets like 529 plans, savings bonds and custodial accounts. All of these assets will have to be divided in a divorce agreement. Depending on your situation, you could decide to split the assets down the middle or divide them unequally based on who contributed.
Protecting college savings
Some divorced parents worry about their ex-spouse having control over their child’s college savings plan. While there may be tax penalties for making early withdrawals, a college savings plan could still be drained by its primary owner.
During asset division negotiations, it’s crucial that you include provisions in the divorce agreement to protect your child’s college savings. You may also want to make sure that you are designated as an interested party on all college savings accounts. This way, you will know what’s happening with a savings account even if your ex controls it.
Agreeing on future contributions
After you have decided how to divide the college savings that already exist, you will have to think about how any future savings will be handled. You and your ex-spouse should work out an agreement about how much each person will contribute to college savings and which savings plans you will be contributing to. Your attorney may help you work out an agreement that is fair to all parties, including your child.