How does divorce impact college planning?
Countless issues can arise for divorced or divorcing parents with children who are currently or someday college-bound. School’s in session with a few lectures from our team.
Financial Planning Tips
Financial planning in a divorce can be short-sighted. Though it’s easy (and understandable) that a parent can focus on the near term when looking down the barrel of losing a partner’s income or household contribution, both parents need to keep their eyes on the financial ball for the sake of children. Plans for college accounts, plans for maximizing educational scholarship opportunities, plans for ensuring against future crippling college debt for the kids should not be put on the back burner. It can be difficult to see through the fog of the anxiety and frustration of a marriage that’s ending. But retaining focus on the future of the children can be a saving grace. We encourage clients to meet with financial advisers early and often in the divorce process — not only to make plans for their own well being in the coming months and years, but also to plan for the well being of the children of divorce and their educational needs.
Estate Planning Tips
Whenever you have a major life change, it is always a good idea to check in on your estate plan to make sure it is aligned with what your current wishes are. Sending a kid off to college is the perfect time to revisit the distribution ages for your children in your trust. Are they now more mature than you once thought they might be, so reducing distribution ages to ensure they have direct assets to funds in the event you pass away might be a good idea? Or perhaps they are less financially mature than you had hoped they might be at the time you created your estate plan, so increasing the distribution age might be in order to prevent them from blowing through their entire inheritance if you were to die tomorrow? Perhaps you chose a successor trustee who is no longer close with you or your family – is this really the person you want being the gatekeeper of your kids funds while they are still under the distribution age (i.e., the person who is making the call as to whether or not a requested preliminary distribution of trust funds meets your definition of what should be used for health, education, maintenance, and welfare)? If not, it might be time to make a change.
And of course, having them execute a General Durable Power of Attorney and an Advance Health Care Directive before they pack up in the fall is a great idea. These two documents ensure that you (or someone else of their choosing) can act financially on their behalf should something prevent them from doing so, as well as ensure you are able to make medical decisions for them in the event they are unable to do so on their own.
Special Needs Child Planning Tips
Under Family Code section 3910, both parents have an equal responsibility to provide financially for a child of whatever age who is incapacitated from earning a living and without sufficient means. This means even if a child of the parties is over age 19 and has graduated from high school, parents may still be liable for child support if that child has special needs and cannot earn a living. The same formula used to calculate child support for minor children is used to calculate support for adult disabled children. Adult children, however, may receive additional funds – such as disability. These funds must be taken into account when calculating child support. Courts have broad discretion in determining exactly how those funds are used in the child support calculation.
Of note, the family court loses jurisdiction to make child custody order once a child turns 18. This means that unless there is a conservatorship put in place, the adult disabled child may decide where he/she wants to live. If that child decides to live exclusively with one parent, child support will be calculated using a 100% timeshare to that parent and a zero percent timeshare to the non-custodial parent. Such a parenting plan will result in the non-custodial parent paying significantly more in child support as parenting timeshare is a factor taken into account when calculating child support.
Co-parenting & College Tips
Co-parenting certainly does not stop when a parent’s child support obligation ceases. Although the California family court cannot order either parent to financially support their child after they are 18 (or 19 and still in high school), there are still many joint decisions needing to be made. For example, parents may have contributed jointly to a 529 college savings account for the child. Who will authorize expenditures? Who will write checks? Will either parent provide additional spending money for extra-curriculars or food? Academic accomplishments such as graduating high school and leaving for college should be some of the most exciting times of a teenager’s life, and acrimonious discord between divorced parents should not distract from that positive experience. As with any co-parenting relationship, the focus should always be on the children’s needs and best interests; the venting and emotional processing should happen elsewhere, like through a therapist, or friends/family. This way, parents can astutely navigate important financial decisions surrounding their child’s academic experience with a clear mind.