Protecting Your Children's Accounts During Divorce

When children have bank or investment accounts, they usually need to have an adult's name on the account along with them. This is true for savings accounts, college funds, and investment accounts.

If your name (or your husband's name) is on an account with your child, what will happen to that account when you get divorced? Is it considered a marital asset? Will it be split? Is your child's money protected during your divorce?

Protecting money becomes priority number one in a divorce. Your children's money is just as important as protecting your personal money.

Gathering and organizing your financial documents is the first critical step in getting your finances in order for your divorce. You'll need to collect bank and credit card statements and note whose name is on what account. When you run across an account that has your child's name on it, set it aside.

Next, identify how you or your spouse is listed on the account: joint, trustee, custodian, etc. If an account has only your child's name on it, then he or she is the only owner and the account will not have any part in your divorce. But if you or your spouse are the only name on the account, you will be considered the owner, and the account would usually be considered a marital asset. If your child's name and your name are on an account, then the treatment of the account will depend on what type of account it is.

This is the time when it would really benefit you to have an amicable discussion with your ex. Hopefully you can agree that any money allocated for the children is off limits in the divorce. Agree to keep contributing to the accounts as you normally would and leave the money intact. Working this out ahead of time can save you a lot of back-and-forth time with mediators or attorneys and in essence, save you money.

If this isn't a possibility in your situation, you'll want to make sure that you classify the accounts correctly on your financial disclosure form during discovery and inform your attorney about the types of accounts you have for your children and what they are intended to be used for.

Determine what your goals are for the money you've set aside for your child. Hopefully you are able to work this out with your spouse. Ensure that you have all of the account documentation. Make sure your attorney is aware of any prior agreements or disagreements about the accounts. If age appropriate, assure your child that his or her money is safe and protected.

Understand your accounts and take the initiative to protect your money, protect your child's money, and help secure your financial future after divorce.