Divorce and Your Child’s College Funding
Getting divorced is a very stressful period in a person’s life, and there is a seemingly endless number of tasks to take care of and issues to resolve. The most immediate concerns include your current living situation, how much child support your kids will get, what property you will receive from the marital estate, whether or not spousal support will be awarded, and just generally how you are going to adjust to life as a single person.
In the midst of your divorce, don’t forget about your children’s college funding. College costs have risen sharply in recent years and funding a child’s higher education is an increasing concern for parents. Even if your kids are young and they are several years away from entering their college years, this is still something you should develop a plan for as part of your divorce settlement.
Some states have explicit statutes on how college expenses are to be handled in a divorce, but Florida law is silent on this matter. Florida courts have affirmed that there is no legal obligation for a parent to pay a child’s college tuition:
“The court cannot require a parent to pay those expenses unless the parties have contracted for them in a marital settlement agreement.” Wagner v. Wagner (Florida First District Court of Appeal, 2004)
So, if you do not have a prior agreement in place that addresses college expenses for your children (such as a prenuptial or postnuptial agreement) and you want your spouse to pay for or contribute to their college education, you need to work out an agreement on this matter before the marriage dissolution is finalized.
Important Details to Work Out with Divorce and Your Child’s College Funding
How Much Will Each Parent Contribute?
Who will be responsible for the payment of college tuition and how will these funds be handled? Will each parent be required to contribute a portion toward the college expenses, or will one parent be paying for everything? This will of course depend heavily on the financial capabilities of each parent.
Along the same lines, you will need to decide whether to create an account for college ahead of time or pay the tuition directly when the time comes. It is usually best to set up a college fund in advance, such as a 529 plan, that the parents can contribute to. Having the funds put away in a designated account where they can only be withdrawn for approved expenses without penalty will help ensure that they will be there when the child is ready for college.
How Will the Divorce Impact Financial Aid for College?
Splitting up the household will put the parents in different tax brackets, and this could impact qualification for college financial aid. Financial aid is usually determined based on the income of the custodial parent (in Florida, the majority time-sharing parent). It is very important to know ahead of time who the custodial parent will be and what they can generally expect for financial aid.
It should also be noted that if you set up a 529 college savings plan, the plan should be owned by the custodial parent or the child. If anyone else’s name is on it, it can be counted negatively toward financial aid and cause the amount of aid the child receives to be significantly reduced.
Address ‘What If’ Scenarios
You have to consider some of the common scenarios that might come up as you decide on how the parents will pay for college tuition. For example, what happens if the financial circumstances of the higher learning parent changes? What if a major health issue comes up that causes this parent to lose his/her income? What if one or both parents get remarried? What if your child decides not to go to college, or they decide to take some “time off” before going?
These are some of the important questions that should be examined during the final divorce settlement and the answers spelled out in writing. Work closely with your attorney to consider these scenarios and how the terms and conditions of the agreement should address them. By working out these issues in advance, you will have more peace of mind knowing that you have a solid plan in place to fund your child’s college education.
Facing a Divorce in Pensacola, FL? Whibbs, Stone, & Barnett is Here to Help
If you are considering divorce or your spouse has already filed, you need an experienced attorney in your corner who thoroughly understands all of the important legal matters that will need to be resolved. If you are in the Pensacola area, contact Whibbs, Stone, & Barnett for the skilled legal guidance you need during this difficult time.
To get started, call our office today at 1-888-219-4561 or message us online to schedule a free initial consultation. We look forward to serving you!