Florida parents who are facing a divorce might be concerned about college savings they have built up for their child. They might be concerned that if the other parent finds a new partner, they might try to use the money to pay for the education of the partner’s child or of a child that they have together.
The beneficiary can be changed on both Coverdell Educational Savings Account and on 529 savings plans. If parents have college funds in either of these, they might want to restrict the use of funds to the child by including this in the separation agreement. It is not possible to change the beneficiary for a custodial 529 or UGMA/UTMA account. Retirement accounts are split between a couple. The government will split and reissue qualifying U.S. savings bonds in new names if asked to do so.
There are several other points parents should address in the separation agreement. If the account is not a joint one, the parent who is not included on the account might still want to receive statements. Accounts should list a successor since if a spouse is the owner and dies, their new spouse might get the account. Both qualified and nonqualified withdrawals should also be addressed.
A parent who is going through a divorce might want to work with an attorney to ensure that their child’s emotional and financial interests are protected. This may require some compromise. For example, the parent might have to accept that the other parent may have different approaches to parenting although some of these can be addressed in the agreement. Negotiating out of court may be an option that can help parents work toward agreement and resolve some of their conflicts, but litigation is a resort if this is unsuccessful.