Our state’s 529 Savings Plan criteria say that plan participants “retain ownership and control over the Account,” and that their children, as the account beneficiaries, have “no control over any of the Account assets.” The court rejects the defendant-wife’s argument that the 529 Savings Plan accounts that the parties set up for their six children were gifts to the children and should have been excluded from the marital estate.
We affirm the trial court’s classification of the parties’ property but vacate and remand the court’s order to address an insufficient finding of fact.
529 Savings Plans
The primary issue in this appeal is a question of first impression: In an equitable distribution proceeding, how should courts classify funds held in a 529 Savings Plan that a married couple created during the marriage for their child’s educational expenses?
Property that was acquired but then given away to some third party during the marriage – including a gift to the married couple’s minor children – is not subject to equitable distribution. However, property must be delivered – divesting the donor of title over the property given – in order to constitute a valid gift.
Children have no ownership rights in the money in 529 Savings Plans. Moreover, parents are under no obligation to spend the money in a 529 Savings Plan on the educational expenses of the children listed as the plan beneficiaries.
Because the parties owned the funds in the 529 Savings Plans, the trial court properly treated those funds as marital property.
We note that, after classifying the parties’ property according to law, trial courts have broad discretion to distribute marital property in an equitable manner. Trial courts should use this discretion to minimize the risk that one spouse is forced to use marital assets in a 529 Savings Plan for purposes other than the intended beneficiary’s educational expenses.
Where defendant presented evidence that she had no income and that plaintiff earned more than $300,000 per year, the trial court erred when it declined to make any findings of fact as to the first G.S. § 50-20(c) factor “as there is no evidence to support this distributional factor.”
Affirmed in part, vacated in part and remanded.
Berens v. Berens (Lawyers Weekly No. 011-242-18, 10 pp.) (Richard Dietz, J.) Appealed from Mecklenburg County District Court (Matt Osman, J.) Gina Graham Morris and Caroline Mitchell for plaintiff; Michelle Connell for defendant. N.C. App.