After Our Divorce, How Does a 529 College Savings Plan Factor into Our Child's College Expenses?
Illinois Divorce Lawyers Answer Your Questions About Paying for College
College savings plans, including those authorized under Section 529 of the Internal Revenue Code, must be considered when a court is determining whether divorced parents will be ordered to help their child with college expenses. Any college savings account created before the parents’ divorce is considered to be a financial resource of the child.
According to Illinois law, divorced parents can be required to help their children cover the costs of attending college or other post-secondary education programs. In making a determination regarding such help, courts in Illinois must consider the financial resources and needs of each parent, as well as the financial resources of the child.
What Are 529 Plans?
Section 529 of the Internal Revenue Code authorizes certain savings plans to be created for the purposes of funding post-high school education. These plans—known as “qualified tuition plans”—are afforded tax advantages and are often sponsored by state agencies and individual schools and universities. For example, a 529 plan can be used to “lock in” current tuition rates at a public college for a student who plans to attend that school in the future.
When determining whether to order divorced parents to help their child pay for college, the court will consider money in a 529 plan to be a resource that belongs to the child. Any contributions made to a plan by a parent after the order is entered will be considered part of that parent’s contribution toward the child’s college expenses.
To learn more about a child’s contributions to his or her own college education, please see our FAQ video “Will My Children Be Expected to Contribute to Their Own College Expenses?”
Call MKFM Law Today
If you are the divorced parent of a child who will soon be headed to college, an experienced family lawyer can help you understand all of your rights and responsibilities. Contact our office by calling 630-665-7300 and schedule your confidential consultation today.