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Protecting college funds in divorce

When couples in Texas divorce, they must go through the process of dividing assets and property acquired during the marriage. Examples of assets include real estate, personal property, retirement plans and investment accounts. The latter includes college savings plans that may have been established for children in a relationship.

There are various types of college savings plans and different rules for managing each one. When a couple divorces, it's important to treat each type of account differently.

In a 529 savings plan, for example, the beneficiary can be changed at any time. Parents who have been investing in their children's accounts may wish to take steps to ensure that these funds are used for the education of the child in whose name the account was started.

Other account types do not permit changing beneficiaries. This has the advantage of ensuring that a spouse cannot use funds saved up during a marriage to fund the education of a child born following the separation.

Other considerations include ensuring that appropriate tax reporting and payments take place. It may also be possible for spouses who do not maintain control of the accounts to still receive statements showing how funds from the accounts are being used.

Individuals who are going through a divorce and concerned about college savings plans may wish to consult with a family law attorney. The lawyer might be able to review the client's situation and make recommendations regarding asset division. Consulting with an expert may prove to be the best way to protect the interests of a child in a divorce case.

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