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How to treat college savings accounts in a Texas divorce

When a couple gets divorced, marital property is generally divided according to state law or according to the terms of a prenuptial agreement. In general, funds placed into a college savings account are such assets. However, the type of account used to save for college expenses may determine how they can be used after a divorce. For instance a 529 account is considered a completed gift.

This means that a former spouse could change the beneficiary designation or revoke the account as a whole. An individual could also simply sit on the money if he or she wanted to be vindictive. However, it may be possible to spell out exactly how funds are supposed to be used as part of a separation agreement.

Another option may be to put the money into a custodial 529 account as the beneficiary can never be changed, and that person takes ownership of the account when he or she reaches the age of majority. If a couple had used U.S. savings bonds to help a child save for college, they can be sent back to the government with instructions for how they should be split. The Treasury will then reissue those bonds as instructed.

Anyone who is going through a divorce or is going through a dispute before or after a divorce may want to talk with an attorney. It may be possible for an attorney to review any existing agreements to determine their validity. Absent an existing agreement, it may be possible to help an individual settle a dispute through mediation or a court order.

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