As time goes by, costs go up. Education is no exception. In fact, it is rare to go long without hearing something in the news about the skyrocketing cost of a college education. That can be intimidating for parents who are trying to save to pay for their kids’ college.
When divorce enters the picture, that can make parents even more worried about the cost of college. A recent article from CNBC addresses this very real concern and notes that careful planning can be an important part of how you approach college savings when it comes to divorce. Some of the tips they offer could prove helpful if divorce is making your college savings plans feel less secure.
Be Realistic
An experienced divorce lawyer understands that being realistic is an important part of the divorce process. Being realistic will help keep you grounded when it comes to negotiation and other aspects of divorce, but it will also help you plan appropriately when it comes to concerns like college for your kids.
It is no secret that in divorce and after, there is often less money available because two households are almost inevitably costlier than one. By being realistic in budgeting for how divorce will impact you financially, you can better prepare for those impacts and create an approach that will still allow you to save responsibly for your kids’ college. Do not forget to factor in the impact that support obligations may have on your available finances, either.
The article points out that an average public college costs approximately $20,770 a year for the 2017-2018 academic year while an average private school tuition will run about $46,950. That means you need to approach your goals in college savings realistically, too. You will probably have to make significant lifestyle changes of your own, and that may mean you have to make changes to your child’s educational future that reflect your means.
Consider a College Savings Plan
College savings plans, also known as 529 plans, can be an important part of your approach to saving for a child’s college education during a marriage and may be even more ideal after a divorce. While many parents have established these college savings plans before divorce factored into the picture, the divorce process can also be an opportunity to explore these plans as well as other methods of saving for your child’s future that could be available to you. There are a number of different arrangements that can be made in determining how to fund a college savings plan after divorce. For instance, both parents can submit a predetermined amount directly to the plan or the monthly spousal support obligation of one spouse could include that spouse’s contribution to the college savings plan.
Money in these accounts accumulates tax free over the life of the account. That means that neither parent has to bear the tax burden that comes along with many other forms of investment. Usually these plans are owned by one parent, but it may be possible to split such plans into two depending on the circumstances. Either way, you will want to work with your lawyer to include specific details about how the funds in such an account will be handled after divorce in your divorce settlement.
Consider Folding College Costs into Your Settlement
It is possible to include the potential cost of college in a divorce settlement. In other words, you may be able to work out an agreement with the other parent who continues support obligations beyond a child aging out of the child support system. In the case of contested divorce, you may be able to ask the court to order this type of an arrangement.
That does not mean you will be forced to come up with money to send your child to the most expensive school possible. These types of agreements typically set realistic goals for financial contributions to a college education, especially when parents are able to come to an agreement about this type of financial arrangement independent of the courts.
Consider Financial Professionals
You may even want to consider working with an experienced financial planner as part of your approach to divorce. While it may seem like an added cost up front, it can help you understand more about the effects your divorce settlement may have on your finances so that you can make the most informed choices as you move forward.
Financial planners who are experienced in working with clients navigating the complexities of divorce may be able to help you make a better budget during and after the divorce. Important considerations like tax consequences or other potential penalties need to be factored into the decisions you make during a divorce, and a financial planner can play an integral role in ensuring that you understand the potential financial implications of the terms of your divorce settlement.
Be Prepared
The divorce process can be intimidating, but you do not have to face it alone. Working with an experienced Florida divorce attorney who understands your unique needs and goals can be an important part of your divorce, especially when it comes to things like saving for your kids’ education. An experienced divorce lawyer understands important nuances in the law and how they can affect things like saving for college. That means you can take a more thorough and dynamic approach to exploring your options.
If you are concerned about how divorce might impact your child’s education now or in the future, contact Scott J. Stadler to schedule a consultation and find out more about the potential impact divorce may have on you and your family.