More on Children's accounts

After my posting last week about children's accounts, Carol Arnott (carnott@greenvillefinancial.com) contacted me with further information:

"To be more specific, assets held in custodian accounts for a minor, such as an UGMA or UTMA, are not considered marital property since they were irrevocable gifts to the child when contributed to the account. A more popular way to save for college education in recent years, however, is the 529 college savings plan. Assets held in these types of plans are controlled by the owner of the account, typically the parent, and may be considered marital property subject to property division. In addition to favorable tax treatment for funds used to pay qualified higher education expenses, one of the key benefits of a 529 plan is that the child does not gain control of the funds when they reach the age of majority. An exception to this rule is if the funds in the 529 plan were transferred from a custodian account. If that’s the case the funds belong to the child and not the parent. Bottom line- look at the statements and ask questions!"