When asked the question “Can a custodial account in a parent name, with a child, be kept separate from marital assets in case of divorce? — DZ”, Karin Price Mueller author of “The fate of custodial accounts during a divorce” interviewed Family Law attorney Ken White to gather information about New Jersey divorce law in relation to the rights of children in a divorce and custodial accounts.
Ken states that the right to child support belongs to the child and a child’s assets belong directly to the child. In the case of a custodial account such as a bank account set up for college the outcome could be addressed differently. There could be an agreement by the parents in the divorce settlement or the judge could decide. If there are accounts set up for children in the name of one or both of the parents, it important to consult with an experienced divorce attorney such as Ken White. Every family’s financial situation is different, and most divorces settlements are different.
You can read the entire article “Biz Brain: The fate of custodial accounts during a divorce” on NJ.com
Setting up custodial accounts
When parents set up custodial accounts, some are legitimate and some not quite so legitimate. When set up properly, custodial accounts have significant legal and tax implications.
If you’re thinking of setting up a custodial account you should strongly consider seeking the advice of a Family Law attorney who’s experienced in handling trusts and estates. Once set up properly, you can’t take the money back – if the parent(s) take money from the custodial account, it could be a criminal act. The assets should be turned over to the child when they are 21 and the money could have an impact on qualifying for financial aid for college. There could also be issues with estate taxes and income taxes. You might be better off with a 529 plan. The best advice is to get professional legal advice for your particular situation.
ABOUT Ken White, ESQ
Kenneth White is a partner in the New Jersey law firm Shane and White. Ken White’s legal practice includes Family Law and Divorce.