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How can you protect a child's college savings account in divorce?

With divorce, it's not just your retirement you'll need to worry about. If you have college savings accounts for your child or children, you'll need to account for them and determine what happens to the money. If only one of you was saving money to the account, this could be a particular point of contention. It might also be a concern if you think the other parent wants to take the money for him or herself despite what it's intended to be used for.

What should you do first to work through the division of a college fund?

Before you get a divorce, you'll want to work on a separation agreement. With a mediator, your attorney or with each other, you can negotiate how you want to separate your assets. College savings funds are assets, and as shared assets, they can be divided.

If you have a 529 savings plan, remember that it is able to have the beneficiary changed on its paperwork, which might not be something you want to have happen if the money was intended for your child. If the beneficiary can be changed, that money could be shifted to step children or other beneficiaries you didn't want to receive it. It might result in the funds being distributed and used for other purposes, too.

To make sure money goes where it's intended, using a custodial 529 account is a better option This account names a single beneficiary that can't be changed later. The beneficiary usually has the right to take ownership of the account once he or she reaches 18. It may be an option to switch to this kind of account during negotiations if this is something you and your spouse can agree on.

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

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