Dividing Assets Held for Children in a Washington Divorce

During a divorce, parents often focus on dividing property like homes, bank accounts, and retirement funds. But some assets, such as college savings accounts, custodial accounts, or a vehicle primarily used by a child, don’t fit neatly into the usual property division framework. These assets are typically held for the benefit of the children, not either parent, and require special care in how they’re managed after separation.

Common Types of Child-Related Assets

• 529 College Savings Plans: These education accounts are owned by one parent but are meant for the child’s future tuition and expenses.
  
  
• Custodial Accounts (UGMA/UTMA): Funds legally belong to the child but are managed by a parent as the custodian until the child reaches adulthood.
  
  
• Vehicles for Teenage Drivers: Often titled in a parent’s name, but primarily used by a child for school, work, or activities.
  
  
• Savings or Investment Accounts for Minors: Sometimes set up jointly by parents or funded by family members as gifts to the child.

How These Assets Are Handled in a Divorce

Unlike traditional marital property, most child-related assets are not divided between the parents. Instead, courts and attorneys focus on ensuring the asset continues to serve its intended purpose, benefiting the child. However, disputes can still arise over who controls or contributes to these accounts after divorce.

Key considerations include:

• Ownership and Control: Who will remain the custodian or account holder?
  
  
• Future Contributions: Will both parents continue contributing to a 529 plan or child’s savings?
  
  
• Usage Restrictions: How and when can funds be used for the child’s needs?
  
  
• Transparency: Will the other parent receive statements or access to monitor the account?

Addressing 529 Plans in Divorce

A 529 plan is legally owned by one parent, who can change the beneficiary or even withdraw funds. That’s why clear language in the divorce agreement is critical. Many settlements include terms requiring:

• Both parents to use the funds only for qualified education expenses.
  
  
• Notice and consent before making withdrawals or changes.
  
  
• Agreements on continued contributions and how future educational costs will be shared.

Vehicles and Other Tangible Assets
When a child drives a vehicle titled to a parent, that car is technically marital property. However, in practice, most parents agree to continue letting the child use it. Settlement agreements often specify who will:

• Retain legal ownership and insurance responsibility.
  
  
• Pay for maintenance, registration, and repairs.
  
  
• Replace the vehicle if it’s damaged or sold.

Collaborative Solutions Work Best

Courts prefer when parents work together to preserve these assets for the child’s benefit. A cooperative, well-drafted parenting or property settlement can prevent future conflict by clearly outlining how each account or asset will be managed.

How Magnuson Lowell, P.S. Can Help

At Magnuson Lowell, P.S., our family law attorneys help parents identify and protect assets meant for their children. We draft practical agreements that balance control, accountability, and flexibility—so you can focus on your child’s future without unnecessary disputes.

If you’re navigating a divorce and have questions about dividing or managing child-related assets, contact us today for a free telephone case evaluation 425-800-0573