College Savings Accounts and 529 Accounts in Virginia Divorce

Divorce proceedings often bring to the forefront critical decisions regarding children’s future, particularly when it involves their education. In Virginia, as in many states, questions surrounding a divorced parent’s obligation to contribute to college expenses and the handling of 529 college savings accounts are common. This article explores dividing college savings accounts during divorce and provides insights for parents navigating the complexities of divorce while also planning for their child’s education.  For an in-depth look at Virginia Child Support, feel free to visit my blog post:  A Comprehensive Guide to Virginia Child Support.

Can a Divorced Parent Be Forced to Pay for College in Virginia?

In Virginia, unlike some other states, there is no statutory requirement for a parent to contribute to college expenses post-divorce. However, this doesn’t mean it’s off the table. Often, these expenses can become a part of settlement negotiations. If both parents agree to share these costs, this agreement can be incorporated into the divorce decree, making it legally binding.

However, without such an agreement, Virginia courts typically do not order parents to pay for college expenses. It’s essential for parents to proactively discuss and include such provisions in their divorce settlement if they wish to ensure a mutual commitment to their child’s higher education.

Handling 529 College Savings Accounts in Divorce

529 college savings plans, designed to encourage saving for future college costs, often become a point of discussion in divorces. In Virginia, these accounts are considered marital property if funded during the marriage with money earned during the marriage, and thus are subject to division upon divorce.

The allocation of these accounts between the parents must be addressed carefully. It’s vital to specify how these funds will be used, who will manage the accounts, and what happens to any remaining funds after the child completes his/her education. Failure to clearly outline these details can lead to future conflicts and potential legal disputes.

Sample Language for Divorce Settlements Involving College Expenses

To aid parents in resolving these issues, below is an example of language that might be employed to address college expenses:

COLLEGE EDUCATION OF THE CHILD. The parties shall pay for the college expenses of their child as set forth below:

• 529 College Savings Accounts. Jane and John agree that the 529 college savings account that John currently holds for their son shall be used solely for his post-secondary education.  The funds in this account shall be used until exhausted for all expenses permitted under the terms of the 529 plan before either party or the child is required to contribute to same.  In the event there are funds remaining in the account upon his completion of his higher education, unless the parties agree otherwise, the remaining funds shall be provided to him when he attains 25 years of age.
• Expenses Defined. “College Expenses” as that term is used in this section, shall refer to the cost of tuition, room and board charged by either the institution or obtained privately, books, and required fees, prevailing at the rates for in-state tuition at the primary state-supported university in the jurisdiction in which such child resides at the time of graduation from high school (e.g., University of Virginia at Charlottesville).  Expenses shall be payable for a maximum of four years.
• Responsibility. The parties shall contribute to the college expenses in the following proportions: Jane _____%, John ____%.  Payment shall be made by each party directly to the institution.  If a party advances some or all of the other party’s share, same shall be deemed a loan, immediately due, bearing interest at the judgment rate from the payment’s due date to the institution until the non-paying party reimburses the other party.
• Parameters. The obligations set forth herein shall terminate at the time a child attains the age of 23 years, unless said child’s education shall have been involuntary interrupted by military service, illness, or similar event beyond the control of said child, in which event such obligation shall be extended for a period of time equal to such involuntary interruption.

Each party’s obligations hereunder are conditioned upon attendance by a child at a college or university agreed upon in writing by Jane and John in advance of the child’s attendance.

Each party’s obligations hereunder are conditioned upon a child maintaining a cumulative grade point average of no less than 2.5, and demonstrating reasonable progress toward attainment of a degree or certificate of completion.

• Bankruptcy. The parties stipulate and agree that the obligation hereunder to pay college expenses constitutes an obligation to pay child support and is therefore non-dischargeable in bankruptcy.
• No Third-Party Beneficiary Rights. No child of the parties shall be permitted to bring any action against either or both parties as a third party beneficiary of this Agreement.  The promises, agreements, and undertakings of the parties herein are intended directly for the benefit of one another, and therefore constitute an obligation between themselves, with no legal or equitable rights inuring to a child of the parties.
• Termination on Death. Each party’s obligation hereunder shall terminate upon his or her death.

(Note: This sample language is provided for illustrative purposes and should be tailored to fit individual circumstances and legal requirements.)

Divorce can significantly impact a child’s future, particularly regarding their education.  Dividing college savings accounts during divorce can be complicated.  In Virginia, while the law doesn’t mandate parents to contribute to college expenses post-divorce, careful planning and clear agreements can ensure that children’s educational needs are met. Understanding how 529 accounts are treated and incorporating specific language in divorce agreements are critical steps in this process.

If you’ve got questions about dividing college savings accounts during divorce, feel free to drop me a line. Jason A. Weis, Esquire – Curran Moher Weis P.C. – jweis@curranmoher.com – 10300 Eaton Place, Suite 520 Fairfax, VA 22030 – 571-328-5020.