How does divorce in Connecticut impact college savings?

The U.S. Department of Agriculture estimates that the average American household spends between $12,000 and $14,000 every year to raise a child. These estimates include the cost of housing, food, child care, clothing and education. One big ticket item excluded from the estimate: the cost of a college education.

A college education remains an important ingredient to a successful resume when searching for a job in today's global economy. The job market is much different than it was for previous generations; instead of simply competing against our classmates for a position we now compete against applicants from around the world, arguably making a college education more important than ever before.

Paying for this education can be difficult as the already high cost of a college education continues to soar. As a result, those going through a divorce should take the time to consider college savings when discussing child support and asset division.

College savings for children of divorce

Ideally, both parents are interested in ensuring their children have the funds needed to attend college. Unfortunately, this is not always the case. In these situations, it may be wise to take active steps to protect current savings and establish future saving methods.

Begin by reviewing current college savings plans. One popular college saving account held by many parents in Connecticut is the 529 College Savings Program. Also known as the Connecticut Higher Education Trust, or CHET, the 529 educational savings plan provides tax benefits to those who invest money for later use towards a child's higher education costs.

In most cases, there is only one account owner on each CHET plan. The child is not the account owner, but a beneficiary. If a spouse holds the account, it is generally deemed an asset of the account owner. Although subject to state and federal income taxes and a 10 percent penalty, the account owner can make withdrawals from the account for purposes other than education. To help avoid surprise withdrawals, address management of the account in the divorce settlement.

Once management of the current plan is established, discuss future savings methods. One option is to continue making contributions to an existing 529 plan. Although each 529 plan only has one account owner, anyone can make contributions. This means even the parent who is not listed as the owner can continue to contribute to his or her child's educational needs.

This is just one of many discussions focusing on saving and paying for a child's college costs that should occur during a divorce proceeding. Making sure that every aspect is discussed can be overwhelming, but neglecting to prepare for the future can mean one parent is left with the bill. As a result, those going through a divorce should contact an experienced Connecticut child support attorney to discuss your situation and better ensure a divorce settlement meets your specific needs.