Agreeing to pay college tuition as part of a divorce settlement

201511.07
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In Virginia, courts do not have the legal authority to order parents to pay for college tuition or costs as part of a divorce or child support case. However, parties may voluntarily agree to make such payments. If this agreement is set forth in the written settlement agreement that resolves the case, then that agreement may be enforced by courts if either party fails to live up to what the agreement requires.

If you are considering entering into such an agreement, there are some important considerations to think about.

Capping or limiting your obligations is a must

Many parents place limits on what they will be responsible for under the terms of the agreement. This can include limits on the amount of tuition that you will be responsible for, the length of time that you will be responsible for paying tuition, and the specific costs that you will or will not be responsible for. Failure to build in these kind of protections could result in a party being obligated to pay much more than he or she bargained for.

Understand and limit third-party beneficiary rights

Contracts generally exist between the persons or “parties” who signed the contract. However, in certain circumstances a contract can be drafted in such a way as to grant rights to third parties who are not signatories to the contract. Such rights are referred to as “third-party beneficiary rights.” When third-parties have rights that are created under such contracts, they also have the ability to sue to enforce those rights. A well drafted marital settlement agreement will take the necessary steps to avoid this.

Make sure that 529 and other Savings Plans are Properly Protected

Many clients in a divorce case will have 529 or other savings plans in place for the purpose of financing a child’s college education. Some clients assume that because these plans have been established for the purpose of saving for college, that there is no need to address them in a divorce settlement. However this may not necessarily be the case. Certain types of accounts (like UTMA accounts) have special rules that protect a the child’s interest in the account. Other accounts may not. Therefore working with your attorney to ensure that these accounts are used for their intended purpose is always advisable.