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Many parents in Michigan take advantage of the Michigan Education Savings Plan (MESP) or MI-529 Plan when saving for their children's college or post high school education.  One question that comes up in a divorce case where there are children is what happens to these types of accounts?  This blog is written to generally address how these types of accounts are handled when dividing property in a divorce or separation in Michigan.  If you have particular questions about your own situation, please do not hesitate to contact us to schedule a consultation by clicking on this link or calling (248) 608-4123.

Will I Have to Terminate My Child's MESP or MI-529 Plan If I Get Divorced?

The short answer is no, you should not have to terminate the MESP or the MI-529.  Typically these types of accounts are held in the name of one parent as the custodian of the account and one child is named as the beneficiary.  If you have more than one child, then a separate account is set-up for each child. Most divorce cases in Oakland and Macomb Michigan are resolved in mediation or through negotiation between counsel and this is a situation that we encounter often, so it should be a relatively simple issue to solve in most circumstances.

Typically what will happen is that the parent that is already named as the custodian of the account will continue to be the custodian of the account (one tip - if you are going to start one of these accounts for a child, name yourself as the custodian of the account).  The judgment of divorce or property division agreement will state that the custodian will continue to maintain the account for the benefit of the child and either parent may, but is not required to contribute additional money to the accounts.  It will also state that the account is only to be used for the purposes allowed under the plan for the benefit of the particular child that is the beneficiary of he account.  Further, there should be language included stating that any withdraw of any funds from the account has to be approved by both parents in writing (an e-mail agreement is sufficient) before the actual withdrawal occurs. 

In most cases neither parent will be required to continue to contribute to the account, however, If both parties agree, then the judgment of divorce or property division agreement could contain language that either one or both parents will continue to contribute a specific amount to the fund, but only if both parents agree.  There is no legal duty for a parent to contribute to such funds, so if the parties do not agree, it is highly unlikely a judge would order either one or both parents to continue to pay money into the college fund..

This blog is intended to very generally address a typical scenario involving a child's college education fund or account and how the same would likely be handled in the event of a divorce or legal separation between the parents.  If you have specific questions about your own child's educational funds and divorce or separation issues, please contact us to schedule a consultation by clicking on this link or calling (248) 608-4123.