When you and your spouse go to court in Michigan to determine child custody, financial considerations such as child support are often a primary focus of the proceedings. Another important money matter is your child’s tax-advantaged savings account. It is critical to include the ownership and control of this account in the agreements because it could have a significant impact on your ability to cover the high costs of college tuition, fees and textbooks when it is time for your child to enroll.
U.S. News reports that financial experts recommend that you consider certain factors before determining who will have the right to make decisions regarding the account after the divorce. The account cannot continue to be the responsibility of both parents. Only one parent can have ownership, but the other parent can be an authorized user of the account. Even if you do not have ownership of it, you would still be able to monitor the use of the funds, but without the ability to access them.
If you are the custodial parent, your financial information will be reported on the federal financial aid forms. A tax-advantaged savings account is as an asset you must include with this information. When you agree to allow your child’s other parent to own the account, it does not have to be included, so you can prevent that asset from reducing the amount of financial aid your child may be eligible to receive. While this information should not be interpreted as legal advice, it can help you to understand some elements involved in regards to your child’s college savings account.