There are various ways in which New York parents may attempt to save money for their children's college funds. Some utilize savings bonds, special savings plans or other types of accounts. Though these accounts may prove to be a valuable asset, there is a chance that parents could face uncertainty when it comes to how those funds may be addressed should the couple divorce.
If individuals used savings bonds as a way to save funds for their children's colleges, the splitting of these bonds are relatively easy. If the property division agreement results in these funds needing to be divided, the bonds could be sent to the Treasury with details on how they should be divided. The Treasury would then reissue the bonds to the required parties in the necessary amounts.
However, if parents utilized a 529 savings plan in hopes of saving money for their children's college funds, there is a possibility that complications could arise. Because 529 funds do allow beneficiaries to be changed, the individual who holds the account could change the name of the beneficiary and use the funds to whatever ends he or she desires. Luckily, individuals could address this possibility in their divorce settlement and work toward ensuring that the funds are used as originally agreed.
Parents want their children to have bright futures, and when a cloud of uncertainty comes over that hope due to a divorce, New York parents will likely want to take the appropriate action to protect their interests. Consulting with experienced attorneys could help interested parties determine which avenues for protecting assets and funds could be feasible for them. Additionally, paying close attention to detail when it comes to the divorce settlement will likely play a considerable role.
Source: Forbes, "How To Protect Your College Savings During A Divorce", Brian Boswell, Aug. 28, 2016