529 monies

[mr. spock]

What is the name of your state (only U.S. law)? Illinois
So in my divorce judgment it says that if there's any money left over after youngest daughter finishes college, it is to be split between my ex and I. She has ownership of the accounts. Just found out that she told our daughter that whatever is left is hers. It could be close to $100k.

Question: Can I bring this to the court's attention? What could they do anyway?
My guess is what she will do is to just give the money over to our daughter and then it will be on me to file with the court to get it back which makes me look like the a**hole parent. I'm torn because I don't mind this going to the kids; but on the other hand, it's the only liquid asset we had on divorcing and she transferred it over to the kids after she filed (judge ruled no on dissipation). I want it to be spent on education, but this is the kid who is not the kind of kid you want to hand a wad of cash to. So i'm concerned about the leftover.

Just let it go?

 

[Zigner]

What is the name of your state (only U.S. law)? Illinois
So in my divorce judgment it says that if there's any money left over after youngest daughter finishes college, it is to be split between my ex and I. She has ownership of the accounts. Just found out that she told our daughter that whatever is left is hers. It could be close to $100k.

Question: Can I bring this to the court's attention? What could they do anyway?
My guess is what she will do is to just give the money over to our daughter and then it will be on me to file with the court to get it back which makes me look like the a**hole parent. I'm torn because I don't mind this going to the kids; but on the other hand, it's the only liquid asset we had on divorcing and she transferred it over to the kids after she filed (judge ruled no on dissipation). I want it to be spent on education, but this is the kid who is not the kind of kid you want to hand a wad of cash to. So i'm concerned about the leftover.

Just let it go?

The court can't grant you money that belongs to someone who is not a party to the action. In other words, if the money is in her account, in her name, then it's hers.

 

[mr. spock]

The court can't grant you money that belongs to someone who is not a party to the action. In other words, if the money is in her account, in her name, then it's hers.

But the court did.
The judgment says: "Any amount remaining in the 529 accounts subsequent to the completion of a bachelors degree by the parties youngest child shall be equally divided by the husband and the wife. Both parties shall be equally responsible for any taxes and penalties upon said division of the remaining balance, if any"

 

[FlyingRon]

Ick.... did she also pay the penalty on the earnings withdrawal when she made the unqualified withdrawal?

Zig...understand that the account belongs not to the child, the child is merely the beneficiary. It appears that the mother made an unqualified withdrawal from the account and one that is contrary to the divorce order. While getting the money back from the kids might be difficult, the parent still owes it.

 

[LdiJ]

Ick.... did she also pay the penalty on the earnings withdrawal when she made the unqualified withdrawal?

Zig...understand that the account belongs not to the child, the child is merely the beneficiary. It appears that the mother made an unqualified withdrawal from the account and one that is contrary to the divorce order. While getting the money back from the kids might be difficult, the parent still owes it.

I do not believe that any money has been withdrawn yet, other than money spent for actual education expenses.

Dad, why do you think that there could be as much as 100k left after the youngest finishes school? Do you know why mom would feel that the remaining money belongs to the youngest rather than to all of the children? Did something happen in terms of educational issues that would lead mom to think it fair that the youngest gets the remaining balance?

 

[FlyingRon]

I do not believe that any money has been withdrawn yet, other than money spent for actual education expenses.

Dad, why do you think that there could be as much as 100k left after the youngest finishes school? Do you know why mom would feel that the remaining money belongs to the youngest rather than to all of the children? Did something happen in terms of educational issues that would lead mom to think it fair that the youngest gets the remaining balance?

The question is why mom believes it belongs to any of the children rather than her and her husband (subject to the divorce decree and property settltment). Again, the 529 account belongs to the parent, the child is a (revocable) beneficiary.

 

[LdiJ]

The question is why mom believes it belongs to any of the children rather than her and her husband (subject to the divorce decree and property settltment). Again, the 529 account belongs to the parent, the child is a (revocable) beneficiary.

Yes, but dad said he wouldn't necessarily mind the money going to the children therefore the answers to my questions may allow people to offer different suggestions to dad as to how to proceed.

 

[mr. spock]

I do not believe that any money has been withdrawn yet, other than money spent for actual education expenses.

Dad, why do you think that there could be as much as 100k left after the youngest finishes school? Do you know why mom would feel that the remaining money belongs to the youngest rather than to all of the children? Did something happen in terms of educational issues that would lead mom to think it fair that the youngest gets the remaining balance?

Because the other kids are done with school and are working, but that's an interesting point. Thank you. There was quite a bit of money in the 529s.

Youngest only has 2 years left and there's $150k left (at least that's what her mom told her). She was originally going to go to a private school but changed her mind.

 

[LdiJ]

Because the other kids are done with school and are working, but that's an interesting point. Thank you. There was quite a bit of money in the 529s.

Youngest only has 2 years left and there's $150k left (at least that's what her mom told her). She was originally going to go to a private school but changed her mind.

Did the older kids go to private or out of state schools and used up all of their money, but the youngest is going to a state school and therefore is going to have a chunk left over? In that case, I can kind of see why mom would think that the youngest should get the rest of the money set aside for her.

If you are not happy with the child getting a wad of cash that she might blow, you might try discussing with mom the option of a trust fund...so that money gets disbursed to her for reasonable needs in a reasonable manner, until she is perhaps 30?

 

[mr. spock]

The older kids went to state school. We never discussed a budget for each kid.
The mom will not discuss anything with me. She will not communicate, unfortunately. Even about the kids. I take pains to make every email business like and just focus on the issue. She's still unwilling to communicate.
I think I will send her an email anyway saying that I don't agree with giving the extra to my youngest. I'd like to have my half (if it even comes to that) in my control. Then I can distribute it as I see fit. I don't expect her to respond. Just want to have it on record that I don't agree. Best case scenario is she says our daughter is mistaken.
This is all odd to me since my ex has had a very troubled relationship with this youngest. She has kicked her out of the house 3 times. The youngest now lives with me.
Regardless, perhaps this is something the court can't help with. I imagine them saying Come back if this happens.

 

[LdiJ]

The older kids went to state school. We never discussed a budget for each kid.
The mom will not discuss anything with me. She will not communicate, unfortunately. Even about the kids. I take pains to make every email business like and just focus on the issue. She's still unwilling to communicate.
I think I will send her an email anyway saying that I don't agree with giving the extra to my youngest. I'd like to have my half (if it even comes to that) in my control. Then I can distribute it as I see fit. I don't expect her to respond. Just want to have it on record that I don't agree. Best case scenario is she says our daughter is mistaken.
This is all odd to me since my ex has had a very troubled relationship with this youngest. She has kicked her out of the house 3 times. The youngest now lives with me.
Regardless, perhaps this is something the court can't help with. I imagine them saying Come back if this happens.

You might want to remind mom (in case she honestly doesn't remember) that the court orders state that any left over money will be divided evenly between you and her, and that you will take her to court for contempt if any of the money is spent on anything but education costs for the child until she finishes school and the money is divided between the two of you.

 

[mr. spock]

Mom is a partner at a major law firm. She understands. It's a power thing.

 

[Dandy Don]

There are strict rules about how 529 accounts should be handled and you need to review those rules to find out who has ownership of the accounts and what can happen with them. What the mother said about the daughter being able to have what is left over may not be true or accurate.

 

[FlyingRon]

There are strict rules about how 529 accounts should be handled and you need to review those rules to find out who has ownership of the accounts and what can happen with them. What the mother said about the daughter being able to have what is left over may not be true or accurate.

The rules aren't that strict. The 529 account belongs to the person(s) who opened it and the divorce decree/property settlement indicates what the disposition should be. The only issue on the 529 is that if they withdraw from it rather than using it for educational purposes, there's going to be tax issues which apparently they are aware. Mom's statements to the daughter are entirely immaterial.

 

[LdiJ]

The rules aren't that strict. The 529 account belongs to the person(s) who opened it and the divorce decree/property settlement indicates what the disposition should be. The only issue on the 529 is that if they withdraw from it rather than using it for educational purposes, there's going to be tax issues which apparently they are aware. Mom's statements to the daughter are entirely immaterial.

I agree. The parent can withdraw the remaining money (and pay the tax on it) and give it to their child if they choose to do so. In this case however, they do not have that choice as the divorce decree says what is to happen to the money. However, dad may have to take it to court to get his share.

Dad, one more thing. Since the account is in mom's name, she is going to have to pay tax on some/all of the money since it won't be going for educational purposes. Therefore expect tax to be deducted from the amount before its divided in half.