For California families, planning for a child’s higher education can be a major priority, especially given the importance of a university degree for future success in many professions. However, the costs of college are rising continuously and may put the expenses nearly out of reach for many families. The College Board estimates that tuition costs rise around 3 percent annually; in order to provide for a child’s education, it can be important to put a plan into effect long before a child considers their future educational plans. However, a divorce can add extra complications and difficulties to the already-onerous task of saving for college.
During a divorce, all marital assets are divided during the process. When a court order is issued, payments like child support for minors and spousal support are generally prioritized over higher education expenses. However, parents who have planned to provide support for their children’s education can include a plan for those expenses as a part of their divorce settlement. During the divorce negotiations, it can also be particularly important to address family assets that are already earmarked for educational costs.
For example, many parents maintain 529 accounts, a specialized type of savings account that allows tax-free accruals as well as tax-free withdrawals when the funds are used for a legitimate educational purpose. In addition to the child beneficiary’s name, the 529 account is generally under the custody of one parent. During a divorce settlement, the 529 account can be divided – retaining its status – or both parents can be given responsibility for making decisions about the account.
Parents going through a divorce may think about how best to negotiate a divorce settlement that takes their concerns into account. A family law attorney might be able to provide strong representation to a divorcing spouse and work to achieve a just settlement in a range of matters, including asset division, child custody and spousal support.