Property division can be one of the most challenging aspects of a Minnesota divorce, especially when large assets are involved. Parents with substantial funds often make it a point to save aggressively for the college costs their children will face, especially if there are goals of sending their offspring to expensive institutions. Protecting these assets during the divorce process could be a serious concern as some types of accounts can be diverted for other uses or beneficiaries.
A 529 savings plan can be created as a custodial account, which ensures that the funds intended for a given child will go to that child. The beneficiary in this situation cannot be changed, which can prevent the diversion of such funds to a new spouse or child after the conclusion of the divorce. A 529 account that is not custodial could go through a change of beneficiary. There may be some cases in which using such funds would make more sense than tapping into retirement accounts to settle with an ex-spouse in a high asset divorce. Specific directions for handling of a 529 account should be included in a divorce settlement.
College preparedness is just one area of family savings that can be called into scrutiny during a divorce. Retirement accounts can be subject to division based on state laws and the roles of the spouses during a marriage. In some cases, both parties may have comparable amounts of money in retirement plans. In other cases, one spouse may have less saved for retirement because of a role as homemaker. The property division stage should encompass the financial needs of the spouses as well as those of the children.
Before beginning divorce proceedings, a parent may want to evaluate their financial standing with a lawyer. Pre-planning one’s strategy for negotiating the financial elements of a divorce can include identifying assets that an individual is willing to sacrifice in order to retain those of greatest importance.