Divorce agreements vague about college costs create risks
Dear Clients and Friends,
An important issue in a divorce can be the childrens’ college education.
For example, what percentage will each parent contribute? How will the college plan be funded? Will the parents be responsible for just tuition, or for room, board and expenses as well? How much say will each parent have on the choice of school? What if one parent’s financial circumstances change for the better or for the worse?
Divorce clearly can have a significant impact on a child’s college plans, even if children are young at the time of the divorce. Bottom-iine – it’s best to address these issues in your divorce agreement and leave little or nothing to chance.
In a recent New Jersey case a couple had four Children, two of whom attended an in-state public university at the time of divorce. As part of the property settlement the couple agreed to contribute equally to “all reasonable and agreed upon” college and secondary education costs above any financial aid the kids received. They also agreed to consult with the kids and each other about the “best education possible” in view of their particular circumstances and those of the kids.
The trouble started when the third childwanted to go to an expensive out-of-state school instead of the state university. The father said he couldn’t afford it, but the child enrolled over his objection. At that point the father refused to pay half the costs, so the mother took him to family court, accusing him of violating the divorce agreement.
The judge determined that the father should not have to pay half the cost, since he did not agree to it. Instead, the judge ordered the father to pay what the contribution would have been had the kid gone to the state school, estimating the tuition to be $20,000 after financial aid, with 5 percent added each year for inflation.
Both parties appealed, and the New Jersey Appellate Division ruled that the lower court made a mistake, both by failing to weigh certain factors in the absence of a clear agreement and by engaging in “conjecture” regarding the cost the father would have paid for a state school.
The court further found that the best interest of the child was indeed to go to the private school. Now the case is going back to family court where a judge may well order the father to pay half those costs.
Another such case arose in Massachusetts where a divorce agreement vaguely obligated parents to confer on “major life decisions.”
The mother enrolled the son at the University of Arizona without formal consultation, but also without the father expressing any formal concerns at the time. The father subsequently filed a contempt motion in family court arguing that the mother violated the divorce agreement by engaging in a “unilateral action” that affected his financial obligations.
The court found no contempt but still modified the father’s financial obligations. The Massachusetts Appeals Court reversed, finding that the father hadn’t sufficiently demonstrated a material change in circumstances and remanded the case back for further findings. This father as well may end up paying more than he thought he had bargained for.
These differences along with legal and accounting fees and court costs that accompany them can be avoided if a divorce agreement includes language that specifically addresses what happens when parents can’t agree on the choice of college.
We continue to invite you all to take advantage of our free initial phone evaluation of your legal matter.