One of the most common types of college savings plans in Ohio is the 529 plan. Although the plan treats contributions as a completed gift, the account holder can effectively revoke it. This right causes potential concern and problems during the divorce process.
During a divorce, a couple must determine how to divide their assets. Sometimes these assets include accounts that affect others, such as college savings for their kids. Rather than leaving these accounts vulnerable, couples may decide to transfer the funds to an account that provides greater protections, such as a trust that is used to benefit their children. The parents may instead decide to open a second account with funds from the first, allowing both parents to manage their own fund. Another option when dealing with these funds is to make clear settlement agreements regarding these funds.
The divorce agreement may include provisions regarding when the account funds can be withdrawn. The parents may decide that in cases of emergency that the funds can be withdrawn. Another important stipulation in a divorce agreement concerning college savings is determining successor owners. If one of the parents happens to pass away before the funds have been distributed, it is important to know how the funds could still be used. For example, if the deceased spouse had remarried and the account was in his or her name and no successor was listed, the college savings could inadvertently wind up with the new spouse. The parents may also want to ensure that they each know how the account is being handled. This may be possible if they both receive a statement on the account.
This is just one of many legal issues that can arise when a couple ends its marriage. In many cases, the estranged spouses and their respective family law attorneys can negotiate an overall settlement agreement that can be submitted to the court for its approval.