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Should You Include College for Your Children in Your Divorce Settlement?


If you divorce your spouse when your children are young, college may seem a far way off in the future. Even if your child is older and college expenses are hovering on the horizon, you might hesitate to include yet another wrinkle in what may feel like the already complicated and emotionally wearing process of negotiating a divorce settlement.

What California Law Says About College

California law only requires parents to pay child support till age 18 (or age 19 if the child is still in high school), unless the child is disabled. And, in any case, parents are not required to contribute to their children’s college expenses, but many parents do. While you are not required by law to negotiate college expenses for your children during your divorce, you have the freedom to do so.

Planning for the Cost of College

The reality is that college can cost an awful lot and is often a source of financial stress for parents and their children. As with many things, it’s often better to plan ahead when it comes to college.

For instance, you may have already started saving for your children’s future education with a 529 account. Or you may have assumed that your spouse will bear the greater responsibility for college expenses because their income is higher.

Regardless of your current plans and assumptions, however, it may be wise to include those in your discussions and negotiations with your ex as you work out your divorce settlement. Parents are granted relative freedom about how to negotiate paying for college expenses. Together, you might consider the following issues:

Which Expenses Will You Cover?

Tuition, fees, textbooks, living expenses – the cost of college can add up quickly. You and your ex should discuss which expenses you feel comfortable covering, and which ones you expect your child to cover either through a part-time job or student loans.

If you both have relatively comparable incomes and financial resources you might agree, for instance, to each support 50% of your child’s tuition. You might also agree to each contribute 25% toward living expenses with the expectation that your child would cover the last 50% of their own room and board.

You should also spend some time mapping out what the costs will be in different situations – a two-year community college degree while your child lives at home vs. a four-year bachelor’s degree out of state will result in very different costs. Perhaps you expect your child to attend one of the CSU or UC campuses when the time comes, or perhaps you hope that they will attend a private university.

For some parents, these decisions will have a significant impact on the level of support they can offer their child. Other families will be able to fully support their children regardless of where they attend university.

Do You Have Any Financial Limitations?

It’s important to be realistic about your financial limitations and to plan for those if you are building college costs into your divorce settlement. You may be anticipating the responsibility of supporting aging parents or planning for your own retirement. On the other hand, you may be expecting a family inheritance or a significant boost in your income in the future. All these factors may impact your ability to contribute to your child’s college expenses.

While it may be difficult to predict with complete accuracy what your financial resources will be once your child is old enough to attend college, it may be possible to make educated projections. By understanding each other’s financial capacities and limitations, you will both be better prepared when that day comes.

How Will Financial Aid Come into Play?

Many divorced parents are surprised to find that their divorce impacts how their child completes their Free Application for Federal Student Aid (FAFSA), a form which helps the government and schools determine the child’s financial aid eligibility.

In most cases, your child will fill out their FAFSA with the income of their custodial parent – the parent with whom they spend the majority of their time. There is no provision on the FAFSA that requires the student to provide the incomes of both their parents if their parents are divorced. However, if the parents share physical custody of their child equally, then the child will include the income of the parent who provides the majority of financial support to the child.

If a parent re-marries, however, this poses further complications for the student’s eligibility for financial aid. In this case, the child must report the income of both their custodial parent (or, if the case may be, the parent who provides more financial support) and their stepparent on their FAFSA form.

The FAFSA website provides further information on how to report parent information.

What Can Be Done Now to Save for College?

Part of planning ahead will involve agreeing to abide by decisions in the future, but it is also important to decide what can be done now. Parents who are divorcing and want to set aside money for their child’s college education have a few options.

First, you can establish or continue contributing to a college fund like a 529 account. However, keep in mind that 529 accounts carry some complications. The account can only be owned by a single person, and that person is permitted to withdraw from the account for non-college expenses even though doing so will incur a 10% tax penalty. That person can also change the beneficiary of the account to somebody else at will.

Furthermore, for the purposes of your divorce settlement, a 529 account created during and contributed to during your marriage will likely be considered community property that is subject to division. Some parents will agree to separate the 529 account from the rest of their assets subject to property division.

For these reasons, it may be advisable to split the 529 account into two accounts and/or include provisions in your divorce settlement that regulate its future use. Some parents choose not to split the account, but instead keep it in the name of one parent (usually the custodial parent). In these cases, you might build a contribution payment structure into your divorce settlement alongside clauses that regulate its use.

Another option is to create a trust or escrow account for your child that will hold and secure any funds that both parents agree to contribute for the purpose of financing their child’s education. This option can provide greater protection against the possibility of a parent deciding to liquidate or transfer the funds against the agreement.

How Gille Kaye Law Group PC Can Help

Including college costs into your divorce settlement requires careful consideration and negotiation. At Gille Kaye Law Group PC, our experienced divorce attorneys understand how the decisions you make today will impact you and your child in the long-term. We are dedicated to helping you find legal solutions that fit your family’s unique circumstances and that will ultimately help you rebuild your life in a positive way.

If you need help negotiating your divorce settlement, contact us online or call (626) 340-0955 to schedule a consultation.

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