Saving money for children’s college tuition and expenses is a common goal for many parents. This can be simple enough while the parents are married in Texas or anywhere else. However once a couple decides to divorce, new arrangements may have to be made in order to continue saving for children’s college education. These arrangements can be made as a part of the divorce settlement.
One method that divorced parents use to save money for children’s college education is through use of a 529 account. This account allows parents to deposit money into the savings and then use the funds for education purposes without having to pay federal income tax. However, when parents divorce, they may have to split the account and then determine what percentage of savings each parent will contribute to the account funds.
Sometimes divorcing parents will freeze the 529 account, which ensures the funds will only go to higher education purposes for their children. However, this also means that parents can no longer make any more deposits into the account. This is important because a divorce can be somewhat contentious and a parent may end up using the funds for something else which the funds are not intended for.
A 529 account is just one of the various property division issues which need to be resolved when parents in Texas decide to file for divorce. Also, child custody, child support and alimony will also need to be settled either between the spouses or possibly through litigation in court. Whatever route is taken, it would be wise to have a thorough understanding of family law and how it is applied to one’s specific case.
Source: US News and World Report, “Discuss College Savings During Divorce Process,” Reyna Gobel, April 29, 2013