Aharonov & Revy Family Law, LLP Aharonov & Revy Family Law, LLP

College savings accounts should be part of California divorce

Throughout the course of a marriage, California couples will make many financial decisions. These decisions often include real estate investments, retirement portfolios and college savings accounts. In the event that a couple decides to divorce, other decisions regarding these same investments will be required.

When making these financial decisions, one often assumes that the college savings account belongs to the child and therefore is not a part of the marital estate. However, in many cases, the child is simply the beneficiary with the custodial parent maintaining control and ownership of the account. With this in mind, it is prudent to specifically address the college savings account in the separation agreement.

At the time of the divorce, both parents may believe that the entire college savings account will be used for a specific child's benefit. However, these parents are unaware of what may happen in the future that could affect this account. For example, the custodial parent could have other children. Additionally, this same parent could remarry and thus gain additional children.

Since the child is most likely the beneficiary rather than the one who controls the account, it is possible that changes could be made to the account. Funds could be withdrawn and used for other purposes. Additionally, beneficiaries could be added or changed.

When a California couple establishes a college savings account for a child, they are doing so in an effort to provide for the child's future education. Such an account is created with the child's best interest in mind. In order to keep the child's best interest in mind, it is important to also consider this college savings account and protect it in any divorce proceedings or marital property division.

Source: Forbes, "How To Protect Your College Savings During A Divorce", Brian Boswell, Aug. 28. 2016

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