Divorcing parents often try to make sure the terms of their settlement provide what their children need to remain happy and healthy. However, one thing that may not be on the top of Colorado parents’ minds during a split is saving for college, especially if their kids are young. However, with tuition costs on the rise, saving for college is an important topic that may be worth discussing during divorce.
One tool at the disposal of parents is a 529 savings account. This is a tax-advantaged account that encourages educational saving and investment. When parents divorce, they may want to think about how this account will be handled, since each individual may have different ideas about college savings.
One suggestion for families that already have these accounts is to freeze the existing fund during divorce proceedings and have it split with a court order. This way, each parent can manage the account and pursue an investment strategy that’s to their liking.
Regardless of whether or not divorcing parents have established a college-savings account for their children, a settlement can include terms for one to be maintained by one or both parents in the future. In fact, a divorce settlement can lay out exactly how much and how often each parent will contribute.
In some cases, college tuition is expected to be the responsibility of the children themselves since they are often legally adults when they enroll. However, this doesn’t mean parents can’t provide some support for children in their divorce agreement in order to help ease the burden of education-related expenses.
Source: U.S. News & World Report, “Discuss College Savings During Divorce Process,” Reyna Gobel, April 29, 2013