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The treatment of college funds in a divorce

New Jersey parents who are going through the process of divorce often find that the road is a rocky one, even when the split is amicable. As one household is split in two, divorcing couples must work to divide assets in a fair manner, which includes everything from the family home and vehicles to savings accounts and college funds.

It is often these financial assets that bring a large amount of questions and negotiation to the divorce proceedings. One or both parties may have concerns about whether a college fund will be used for its intended purpose in the future. For instance, in the case of remarriage and new children, a former spouse may wonder if the college fund will then be used for a different child. According to experts, there are several ways to ensure that a college fund cannot be transferred to another child after divorce.

First, those going through a divorce should be aware of the type of college fund that is in place for their child or children. A 529 plan, one of the most common college funds, is considered an outside asset, making it easy for the account holder on record to change the beneficiary. Experts caution that the divorce agreement should protect the intended beneficiary and lay out specific rules regarding the use of the account. For the purposes of divorce, a custodial 529 is ideal as the beneficiary cannot be changed under any circumstances, and divorcing couples may find that savings bonds are also simple to deal with when dividing marital property.

Those who are ending their marriage and dividing assets may benefit from the assistance of a family law attorney. Legal counsel may suggest divorce mediation as an avenue that divorcing couples can use to avoid disputes and reach a property division settlement agreement that is agreeable to both parties.

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