Among the various financial considerations, planning and safeguarding funds for a child's future education, such as university costs, can be a critical concern during divorce. This guide explores how family law addresses such issues and offers practical advice for parents navigating this situation.
Among the various financial considerations, planning and safeguarding funds for a child’s future education, such as university costs, can be a critical concern during divorce. This guide explores how family law addresses such issues and offers practical advice for parents navigating this situation.
If you have a family law issue and you are concerned that you may require legal advice to understand your options, contact specialist family law solicitor Joanne Major. Joanne is the founder of her specialist family law firm and has spent her 25-year legal career specialising in family and matrimonial cases.
Existing funds for a child’s education: what happens during divorce?
When a couple divorces, all financial resources—including savings, investments, and funds earmarked for specific purposes like a child’s education—are assessed as part of the financial settlement. Here, the guiding principle in divorce is fairness, with the child’s welfare being a primary consideration.
If a pot of money has been explicitly set aside for a child’s future education (e.g., in a trust or a designated savings account), the court generally aims to protect this money from being used for other purposes.
The court has the discretion, where funds allow, to ensure that a child’s educational needs are met when dividing assets. This may involve preserving specific funds for educational purposes or making provisions in the financial order to ensure that both parents contribute towards future educational costs.
However, if the money is in a joint account or not legally earmarked for the child, it may be treated as part of the couple’s general matrimonial assets. In such cases, it can be redistributed as part of the overall financial settlement, potentially jeopardising the intended purpose.
If a parent insists on protecting these funds, they may need to provide evidence (e.g., account statements, documentation of intent) that the money was always meant for the child.
Building a post-divorce educational fund
Post-divorce, both parents can agree to contribute regularly to a dedicated fund for their child’s education. This can be formalised through:
- Mutual agreement – parents can create a private agreement outlining their respective contributions, but these are not legally enforceable without a formal order.
- Court order – to ensure enforceability, contributions can be incorporated into a legally binding financial order, such as a consent order, if both parties agree, or a child maintenance order if determined by the court.
How do I choose the right savings vehicle?
Parents may choose from various savings vehicles to build a fund. Tax-efficient savings accounts specifically for children, such as Junior ISAs, allow contributions to be made by both parents. The child gains control at 18.
Parents may set up a trust for the child, specifying the purpose of the funds (e.g., higher education). A joint or sole savings account can be established, but clear terms should be agreed upon to avoid disputes. These types of accounts generally only provided minimal interest on the capital and may not necessarily be the most efficient way of increasing funds. It is sensible to obtain advice from a financial advisor who will be able to tell you about the best option for your circumstances.
What can I do if the other parent refuses to contribute?
Despite best intentions, circumstances may arise where one parent fails to honour their commitment to contributing towards the child’s education fund. This can happen because of financial difficulties, disagreements, or a change in priorities. Such situations can be addressed in the following ways:
- If contributions are based on a private agreement, there is little legal recourse unless the agreement was formalised into a court order
- If the contributions were agreed upon in a legally binding court order, the other parent can seek enforcement through the family court. Before resorting to litigation, parents should explore mediation or collaborative law to resolve disputes amicably. These processes can help clarify financial responsibilities and preserve co-parenting relationships.
Child maintenance payments are separate from voluntary contributions to an educational fund. The receiving parent cannot legally demand additional contributions unless provision has been made in some way within a court order.
Planning for university costs: practical considerations
University education can be costly, with tuition fees reaching up to £9,250 annually (at the time of writing). Parents should consider accommodation, living expenses, and additional costs such as books, travel, and extracurricular activities.
Saving strategies can include:
- Both parents can set up standing orders for making regular payments into a savings account
- Explore government schemes, such as student loans, which can supplement parental contributions
- Extended family, such as grandparents, may also wish to contribute, reducing the burden on divorced parents
As circumstances change, parents should remain flexible in their approach. For instance, if one parent’s financial situation improves, they may choose to increase their contributions. Similarly, parents should be prepared to adjust their savings plan if the child chooses a less expensive educational path.
Are there any legal protections for a child’s education fund?
A trust can provide a robust legal framework for safeguarding educational funds. By establishing a trust, parents can:
- Specify the purpose of the funds
- Appoint a trustee to manage the funds impartially
- Prevent misuse or disputes over the money
In other cases, and to ensure fairness and enforceability, contributions to an education fund can be incorporated into a financial consent order during divorce proceedings. This will be in addition to any general child maintenance which may be assessed by the Child Maintenance Service (CMS) separately. However, when making an assessment, the CMS may take such contributions into account.
Addressing potential challenges
If one parent experiences financial difficulties post-divorce, they may struggle to meet their agreed contributions. In such cases, the parents should discuss temporary adjustments to the plan if necessary and see if an agreement can be reached that benefits all parties.
Disagreements may arise over how the education fund is used. For example, one parent may object to the child attending a specific university due to cost. To prevent such conflicts:
- The purpose and limitations of the fund should be clearly defined in advance
- Decisions about the child’s education should ideally involve both parents and take the child’s preferences into account
Divorce adds complexity to the already challenging task of saving for a child’s future education. However, with careful planning, open communication, and the appropriate legal safeguards, both parents can ensure that their child’s educational aspirations remain achievable. By prioritising the child’s welfare and working together, divorced parents can build a secure financial foundation for their child’s future.
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