Posted by Nydia Streets of Streets Law in Florida Divorce
What happens to marital funds in a college savings account established for a child when there is a divorce? While it is not required that parents pay college tuition for a child in Florida, a college savings account can be awarded to one parent in equitable distribution as a trustee of funds for the child. This was an issue in the case Aronoff v. Aronoff, 4D21-3305 (Fla. 4th DCA February 15, 2023).
In their final judgment of divorce, the trial court ordered the former husband to maintain life insurance policies which totaled $7 million in benefits. He was ordered to designate the former wife as the beneficiary of half of these policies until the parties’ child turned 18. The parties’ child was 16 at the time this judgment was entered. The court also awarded the former wife the college savings plan established for their minor child. She testified she was the only one to contribute to it, and that she had taken $60,000 from it to pay for the child’s private schooling. The former husband proposed that the funds from the account be applied toward marital debts. The court found the former husband would not act in the best interest of the child and awarded this account to the former wife in equitable distribution as the sole trustee of the account. The former husband appealed both issues.
As to life insurance, the appellate court agreed with the former husband that it was improperly awarded, especially where the potential payout to the former wife of $3.5 million far exceeded any support obligation the former husband had remaining in the two years left before the child turned 18. The court held “As the Husband argues, the trial court did not make any specific findings as to the availability and cost of the policies, the impact of such cost on the Husband’s finances, or the circumstances requiring security for the Husband’s financial obligations under the final judgment. At the time of the judgment, the parties’ son was about two years away from turning eighteen. The death benefit on the policies far exceeded the Husband’s mandatory financial obligations to his son. We therefore reverse and remand for the trial court to make the requisite findings regarding the Husband’s life insurance obligation.”
Turning to the college savings plan, the court held there was no abuse of discretion in awarding the account to the former wife. The court held “In the context of the parties’ financial situation, the trial court did not abuse its discretion in designating the Wife as the ‘sole trustee’ of the child’s college savings accounts. There was evidence to support the conclusion that the Wife was most likely to manage the funds in the best interest of the child. To the extent that the judgment’s trustee designation amounted to an ‘unequal distribution’ of marital assets, there was sufficient justification for it, as insuring the child’s educational future, in light of the child’s particular needs, did ‘equity and justice between the parties’ § 61.075(1)(j), Fla. Stat. (2020). The trial court did not abuse its discretion on this issue.”
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