The overwhelming majority of people who divorce while their children are still minors have at best a murky vision of what they will pay toward their children’s college expenses. In fact, there are a myriad of variables that will come into play. Will the children go to an ivy league university or an in state public school or will they instead opt for a local community college? Will they get sports scholarships, academic scholarships, or no scholarships? What about grants and loans? What will they qualify for? And how much will each parent contribute?
Fortunately, the Illinois Marriage and Dissolution of Marriage Act provides in section 513 that unless the parties have agreed otherwise, the court can order a parent to contribute money toward college expenses to the extent of his or her ability. Because most people do not know what the future holds, they wisely opt to incorporate into their Marital Settlement Agreement what we Illinois divorce lawyers call “section 513 language” and therefore choose to have the court make a determination at the time a child is ready for college (unless the parents reach their own agreement later).
So what does any of this have to do with your parents saving money to give to your former spouse? Here’s the rub: Under section 513, the court orders parents to contribute based on the unmet needs of the child. To determine unmet needs, the court looks to the total educational costs and then the resources of the parents and the child. So if your parents have selflessly been putting aside college money in the names of their grandchildren, that fund will be considered a resource of the child. And guess who gets the benefit of that: your ex.
Let us consider a very simple example where you and your former spouse each make the same income and where there is an unmet need of $20,000.00 for your child to attend college. All things being equal, you and your husband will each pay $10,000. Now let us assume that your ex spouse’s parents set aside no college funds whatsoever for your child but your parents sacrificed and set up funds or savings bonds in the child’s name for college that are now worth $20,000. In this scenario, the court would most likely apply the grandparent savings to the unmet need and require neither parent to contribute. Sure, you are off the hook. But so is your former spouse…and your parents just saved your ex $10,000. Altering the numbers for a moment, if the grandparents had saved only $8,000.00, then the unmet need would be $12,000.00 and each parent should contribute $6,000.
Had the grandparents kept the money in their own names, they could have made a payment on your behalf after the judge ordered you to pay your portion and you would be out of pocket for nothing, while your ex spouse will have to come up with his/her own share of the money. It is a simple difference, but one that most people fail to consider. And when you factor larger unmet needs for several children each attending college for a minimum of four years, the cost of such a mistake can be devastating. So tell the folks that it is okay for them to save for the grandkids, but they need to make sure to consult an estate planning attorney and to not put the money in the grandchildren’s names (…even if you are still married). Unless, of course, they do not mind saving for your ex.
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