I have four children, ranging in age from 6 to 17. I am going through a divorce. I am the children’s mother and we have 529 savings plans for all four children. I have been a stay-home mother, and my estranged husband owns a small family business. In total, we have about $250,000 in 529 savings plans. My estranged husband is the owner. Marital money was used to fund the 529 plans. Obviously, the 6-year-old has less than the 17-year-old, and I anticipate the 17-year-old will be going to college next year. She is a senior now. Is this marital money? I worry that my estranged husband, the father of the children, may use the money for something else. How do I ensure that the money is used for our four children for college?
You asked a very good question and one that frequently comes up in family law matters. A 529 plan has both an owner and a beneficiary. The owner can change the beneficiary, or even cash-in the 529 plan. Since your estranged husband is the owner, it is possible for him to change the beneficiary to someone other than a child that you and he have together. For example, if he remarries, he could change the beneficiary to a stepchild, which I have seen happen if the father becomes estranged in any way from his own children.
A new case from the North Carolina Court of Appeals recently solidified the principle that a 529 plan is marital property if one of the parties to the marriage owns the plan and the plan was created with marital money. Berens v. Berens from Charlotte dealt with the issue of whether or not a substantial 529 plan was marital property. In Berens, the mother was the owner of the plan and received the plan as her asset in the divorce. Ms. Berens also received an unequal distribution, but the issue on appeal was essentially whether or not the court was treating her fairly, only giving her a 57 percent distribution when it was obvious that the money would be used for the children. She needed funds for herself, also.
If you settle your marital property with a private agreement, your attorney can place language in the private agreement that restrains your ex from the use of the money for any reason other than your children’s education. You might ask for statements to be sent to you annually. You might want to put a provision in the agreement that you receive copies of the checks written to the institutions of higher education, and a restriction on the use of the funds in the 529 plan for any purpose other than your children’s education.
If you do not settle, and you try your equitable distribution to the tribunal, then you will make an argument related to the use of the 529 plans. Perhaps you will want to argue for one-half of the ownership of the plans or even more than half and an unequal division in your favor. On a side note, the Uniform Gift to Minors Act allows gifts to be vested with the children and thus owned outside of the marital estate, in all probability. That is another planning option.
My estranged husband is from Mexico and he has a Mexican passport. He does not have a US passport. We have two children, who were born in the United States. Our children do not have a Mexican passport, but only have a United States passport. They have traveled frequently in Mexico in the past before our separation. But I was always with them. Now that we are separated, I am not so sure about letting the children travel to Mexico without me. He has threatened to take them to Mexico and not return. They are ages 5 and 7. I do not believe he would do this, but then again he might. Can I ask the court to hold his Mexican passport so he cannot return to Mexico? He has legal papers to stay in the United States because of our marriage.
Immigration, family law and passports are complex areas of the law when combined.
It is also extremely expensive, complicated and takes a long time to get a child back from a foreign country if a parent has abducted the child to that foreign country. I understand that getting children back from Mexico, even though Mexico is party to the Hague Treaty for International Child Abduction, is likewise complicated. So, you have a real problem.
A short-term solution might be to have your estranged husband surrender his Mexican passport to the court. In the recent case of Grodner v. Grodner, the court in Pitt County did that with a Polish father. In Grodner, the court gave the mother exclusive authority over all matters concerning the child’s travel, including international travel, and the court further required that the father surrender both his US and Polish passports to the clerk of court. He could apply to the court for travel. Poland allows dual citizenship for persons born after Jan. 8, 1951. The Grodner decision was decided on an appellate technicality, but in looking at the substance of the opinion, the father in Grodner did not make the right arguments to the Court of Appeals, in my opinion.
I think that there are two arguments that would have allowed the father to prevail. First, the United States Constitution makes it a constitutional right for citizens to be able to travel without restriction of the US. Second, the Foreign Sovereign Immunities Act 28 USC Section 1604 bars our courts from taking the property of a foreign sovereign nation. The Polish passport is owned by Poland. And I do not think it was appropriate for the District Court to order the Polish passport into the hands of the clerk of court in a child custody case.
That being all said, I understand your fear of the children being in Mexico in an unauthorized situation. I think that the thing to do is to make sure that you ask the court for sole control of the children’s passports. You also can register with the State Department to make sure those passports cannot be used. The State Department has an alert procedure that you can follow.
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