Many parents in California have concerns about how they will be able to contribute financially to their children’s college expenses. For parents who are going through a divorce, those concerns may be compounded by the impact that the process can have on their finances.
One important factor that divorcing parents should keep in mind is that their financial plans for their children’s college education are likely to change. As the income for the household is divided, there is likely to be less money available to apply to college expenses. The question of whether a child is to attend public or private institution needs to be revisited. Serious consideration also has to be given to whether student loans, scholarships or grants should be pursued.
One option parents have is to use a 529 plan that allows them to save for their children’s college. The plan allows the money parents invest in it to accumulate without being assessed taxes. As along as the money is applied toward valid education costs, there will also be no taxes assessed on the money that is withdrawn from the plan.
Usually, just one parent owns the 529 plan. However, there should be provisions included in the divorce agreement that detail exactly how the money should be spent as ownership and beneficiary of the plan can be amended and the funds can be easily withdrawn.
An attorney who practices divorce law may advise clients about their legal options regarding how to resolve divorce legal issues. The attorney may litigate to protect the interests and rights of clients regarding asset division, child support, spousal support and other financial matters. The attorney may also petition the court to modify existing support orders if there is a change in the financial standing of a client or if there is an important financial need.