REMEMBER TO PROTECT KIDS’ COLLEGE FUNDS IN A DIVORCE
Many parents don’t focus too much on their kids’ college tuition until the time to pay it draws near. If you are going through a divorce, your child’s college financing might be the last thing on your mind. However, this is a time to try to protect your child’s ability to count on you and your ex to help out with some of the expenses.
There are a few things to think about when you are in this position. One of these is that your helping your children doesn’t have to be dependent upon your ex. Instead, you can start a 529 plan account that enables you to earmark money for higher learning. This is a tax-free option since your children won’t have to pay taxes to take the money out if it is being used for education.
Another option that you need to negotiate with your ex to address college costs in the custody or support arrangement. If you do this, the agreement should provide a monetary amount and either a maximum number of years or an age at which the funds will stop. In these cases, child support might transition over to higher-learning cost assistance.
You also have the option of doing nothing and hoping that your children will find a way to pay for college if they want to attend. While this might be tempting, it can also mean that you will come under some financial scrutiny when your child files for federal financial aid.
It is usually best to plan ahead when you are going through a divorce. Four out of every 10 marriages end in divorce. There is no shame in going through a divorce — just make sure that you protect yourself and your children.
Source: CNBC, “How to keep your divorce from sabotaging your children’s college education,” Lorie Konish, May 18, 2018