The decision to divorce can be difficult for any couple in Illinois, but depending on a number of factors such as the length of marriage, amount of assets and age of any children, the divorce process itself can be a challenge – even if those divorcing are willing to work with each other. Property division in particular can be a challenge with consequences that go beyond just the ex-spouses.
For example, many parents begin saving for college when children are born or early in their development. For some, this means opening a 529 plan – an investment account for college or other higher level education – and reaping its tax advantages while setting aside money for later use. However, when parents decide to divorce, one of the hidden issues that will have to be addressed is how to deal with such accounts.
One option would be to freeze the account during the divorce process, which would prevent the owners, which may include both spouses, from withdrawing money and protecting the investment. Once this is done, the parties or the judge has the option of splitting the existing plan into two separate ones each controlled individually by one parent. If this occurs, it can be helpful to have an agreement over who is to invest what into the accounts to ensure funds are there when it comes time to pay for education. A final consideration may be how to deal with any remaining money.
In divorce, there are many issues that will need to be discussed, and not all could be considered obvious from the outset. Like any 529 plans, other assets or issues such as child support can come up and may feel overwhelming for those going through the divorce process. Luckily, those facing such a situation here in McHenry County can work with an experienced attorney to help ensure the full picture is known and all issues are properly addressed so that all parties can move on in the best possible position.
Source: US News and World Report, “Discuss College Savings During Divorce Process,” Reyna Gobel, April 29, 2013