How to save for your child's future post-divorce
Divorce is a certainly separation of personal finances, but it's not always an elimination of shared financial responsibility. You and your ex-spouse may still be facing the cost of putting a kid through college, which, on average, is $57,000 for four years. While you may already be preparing for your child's future, it's important that you continue to do so even after the divorce. The path ahead may be uncertain, but there are some initial steps you can take that your kid will thank you for.
You and your ex-spouse may have already opened a 529 college-savings plan. Before the divorce is final, it's important that you develop a strategy for managing that account. One person could retain ownership while the other contributes monthly. While this may seem simple, splitting the account in two is usually less stressful. This allows both of you to contribute and reduces the need for regular communication.
Depending on the circumstances of the divorce, you may worry that after splitting the 529, your ex will liquidate their half of the savings. To mitigate that possibility, during the divorce proceedings, you can place legal restrictions on withdrawals not connected to your child's education. With these protections in place, you can rest easier.
Plan for What's Next
In the event of an unexpected death, make sure both accounts will transfer directly to your child. This extra precaution can eliminate any complications, particularly if your ex-spouse remarries.
Having established clear boundaries, you should discuss how much you'll each contribute moving forward. If possible, agree to split the responsibility, just like the existing account, 50-50.
All these steps may seem unnecessary in the moment, but your child will be grateful you took the time to plan ahead. By thinking through these details, even in the middle of divorce, you'll be moving toward financial freedom and your bigger, better future.