Will they take my kids college fund?

[srjth]

I have a no asset ch. 7 case but there is one area that is concerning me. I have 2 "College 529 Savings Plan" accounts for my kids with about 7K combined in them, however, I only contributed $1100 in the last 12 months to the accounts, the rest was contributed in prior years. The accounts are listed under my kids names and I am the custodian on the accounts, however, the accounts are reported under my social security number. Will the trustee consider this an asset of mine and take my kids college fund? I was told that the contributions made prior to 12 months before filing BK are protected, much like IRA funds are protected. Any advice?

[olivies]

I have a no asset ch. 7 case but there is one area that is concerning me. I have 2 "College 529 Savings Plan" accounts for my kids with about 7K combined in them, however, I only contributed $1100 in the last 12 months to the accounts, the rest was contributed in prior years. The accounts are listed under my kids names and I am the custodian on the accounts, however, the accounts are reported under my social security number. Will the trustee consider this an asset of mine and take my kids college fund? I was told that the contributions made prior to 12 months before filing BK are protected, much like IRA funds are protected. Any advice?

Our attorney said our kids' 529 accounts were fine. None of them are worth more than $1200, and we are custodians but the kids are named beneficiaries.

[srjth]

Our attorney said our kids' 529 accounts were fine. None of them are worth more than $1200, and we are custodians but the kids are named beneficiaries.

Thanks for answering. Same here, my kids are the beneficiaries as well, but my attorney wasn't quite sure what was going to happen with them. I have a disclosure from the company that holds the 529 account that said everything except what was contributed in the last 12 months will be protected.

I guess i'm mostly concerned that this $1100 will turn my case into an asset case and slow things down. I just want the discharge to come as quickly and smoothly as possible. I won't be able to relax until that happens.

[Flamingo]

You are the custodian on the accounts and, therefore, have access to the accounts to withdraw and deposit so the accounts are considered assets since they are for your minor children that you claim as dependents on your taxes. Discuss fully with your attorney because you have access to those funds no matter who is the beneficiary of the funds.

[srjth]

You are the custodian on the accounts and, therefore, have access to the accounts to withdraw and deposit so the accounts are considered assets since they are for your minor children that you claim as dependents on your taxes. Discuss fully with your attorney because you have access to those funds no matter who is the beneficiary of the funds.

See, this is where I am confused. I also have conventional savings accounts for my children in which I am the custodian (and a signer on) but those accounts are under my children's social security numbers so my attny said that those do not count as my assets. Is this not true?

here is an except from the disclosure the company who holds my 529 accounts provided. The company is located in Alaska:

"Creditor Protection

Federal law provides limited creditor protections
based on the timing of contributions and the debtor’s
relationship to the Beneficiary. Generally, contributions
made to a debtor’s 529 Plan Account less than
one year before the filing of a bankruptcy petition
are included in the debtor’s bankruptcy estate and
are not protected from creditors. Contributions made
by a debtor more than one year before the filing
of a bankruptcy petition are generally not part of a
debtor’s bankruptcy estate, provided that the contributions
are not deemed excess contributions or
extensions of credit and the Beneficiary of the 529
Plan Account is the debtor’s child, stepchild, grandchild,
or stepgrandchild. However, for contributions
made between one and two years prior to the filing
of a bankruptcy petition, a maximum of $5,000 in
contributions may be excluded from the debtor’s
bankruptcy estate.
There are federal standards for bankruptcy proceedings;
however, certain bankruptcy and creditor
protection laws rest with each state, and a state
generally is permitted to adopt more stringent laws
in this area. The Trust was established in Alaska and
is to be interpreted in accordance with the laws of
Alaska. Each Account is conclusively presumed to be
a spendthrift trust. Alaska law is designed to protect
Accounts from claims by creditors of the Account
Holder or Beneficiary by making them exempt from
such claims, except for contributions made after being
in default of child support obligations for 30 days.
As of the date of this Plan Disclosure Document, no
court has ruled on matters involving this interpretation.
The Trust _____makes no representations or warrantees regarding
protection from creditors. You should consult a legal
advisor regarding the application of this specific law
to your particular circumstances and to determine
how this protection may apply to your situation."