Custodial Accounts and 529s in a Divorce: Who Controls Your Kid's Money?

A custodial account (UTMA or UGMA) already belongs to your child, so courts generally don't divide it as marital property. A 529 is different: it belongs to the parent who owns it and can be part of the settlement. In both cases, the person whose name is on the account controls it until something formally changes.

This is general education, not legal advice. Divorce and custodial-account law is set state by state, so a family-law attorney in your state is the person to ask about your case.

Who owns each kind of kid's account?

Is a UTMA account marital property?

Usually not. Money in a UTMA or UGMA was an irrevocable gift to your child, so it isn't either parent's to divide. Courts in Colorado, Virginia and Indiana, among others, have ruled that way.

It isn't universal. Some courts have treated these accounts as marital property, and the answer can turn on whether the account was set up and funded properly. That's a question for your attorney.

What divorce doesn't change is who manages the account. The custodian stays the custodian. If that's your former spouse, they still make the investment and withdrawal decisions until your child reaches the state's transfer age.

What can a custodian do with the money?

A custodian is a fiduciary, meaning they're legally bound to manage the money for your child's benefit and nobody else's. Spending it on the custodian's own bills, a legal fee, or the divorce itself breaks that duty.

Courts have also held that a custodian generally can't use the account to cover what a parent already owes, such as basic support. The line between a child's extra and a parent's obligation is covered in what UTMA money can be used for.

A child whose account was misused can sue the custodian once they're an adult, and some have. That history is part of why many divorcing parents ask for the accounts to be listed in the settlement.

Can the custodian be changed?

Yes, through a few routes set by your state's version of the UTMA.

• Resignation. A custodian can resign and name a successor, usually on the brokerage's own form.
• Successor custodian. A custodian can name, in writing, who takes over if they die or can't serve. In many states, a child 14 or older can name one if no one was chosen.
• Court removal. An adult family member, a guardian, or a child 14 or older can petition a court to remove a custodian for cause and appoint someone else.

Updating the successor is worth doing during a divorce. The same form matters if a parent dies, as covered in what happens to your kids' accounts if you die.

What happens to a 529 in a divorce?

A 529 is owned by the account owner, not the child, so it's often treated as that parent's asset and divided or assigned in the settlement. The owner can change the beneficiary or take the money out, though a withdrawal not used for education has its earnings taxed plus a 10% penalty.

Common ways families handle it:

• Leave it with one parent, with the settlement spelling out how the money can be used.
• Transfer ownership to the other parent. Many plans have a change-of-owner form, and some require a copy of the divorce decree and a signature guarantee.
• Split it into two 529s, one owned by each parent, for the same child.

Each plan sets its own owner-change rules, so read your plan's documents. Naming a successor owner is also a plan-level setting.

How does divorce affect the FAFSA?

The FAFSA uses the parent who gave your child more financial support over the last 12 months. That's not always the parent your child lives with. If support was equal, it's the parent with more income and assets.

• A UTMA counts as your child's asset no matter which parent is custodian, assessed at 20% a year.
• A 529 owned by the FAFSA parent counts as a parent asset, assessed at about 5.64% at most.
• A 529 owned by the other parent isn't reported on the FAFSA.

Many private colleges use the CSS Profile, which can ask about both parents. More on the formula is in how custodial accounts affect financial aid.

How can both parents keep an eye on the accounts?

Statements go to the custodian or owner, so the other parent can lose sight of the accounts. Some families write into the settlement that both parents get copies of statements, or that withdrawals need notice.

MemoryBank lets the parent who set up the family invite a co-parent, so both see the same dashboard of each child's connected accounts. An invited co-parent has the same access to the family's MemoryBank settings as you do, and either of you can end the connection later. Seeing an account in MemoryBank doesn't give anyone legal authority over it; only the institution's forms and a court can do that.

What MemoryBank does not do

MemoryBank can't change a custodian, an owner or a beneficiary, and it can't move money between parents. MemoryBank is not a brokerage. It cannot receive, keep or transfer securities.

This page describes general rules as of October 2026. Custodial-account and divorce law varies by state, and courts don't all agree. For your situation, talk with a family-law attorney, and with a tax professional or financial advisor about tax and aid effects.

Frequently asked questions

Is a UTMA account marital property in a divorce?

Usually not. Money in a UTMA or UGMA is an irrevocable gift that legally belongs to the child, and courts in many states have refused to divide it. A few courts have ruled otherwise, so ask a family-law attorney in your state.

Can my ex take money out of our child's custodial account?

A custodian can withdraw money only for the child's benefit. Using it for their own expenses, or to cover support they already owe, is a breach of fiduciary duty that a court can address, and the child can sue once they're an adult.

How do I change the custodian on a UTMA account after divorce?

The current custodian can resign and name a successor on the brokerage's form. If they won't, an adult family member or a child 14 or older can usually petition a court to remove the custodian for cause. The exact rules come from your state's UTMA.

Who gets the 529 plan in a divorce?

The 529 belongs to its account owner, so it's often treated as that parent's asset and handled in the settlement. Families keep it with one parent, transfer ownership with the plan's change-of-owner form, or split it into two accounts for the same child.

Which parent fills out the FAFSA after a divorce?

The parent who provided more financial support over the last 12 months, which isn't always the parent the child lives with. If support was equal, it's the parent with more income and assets.

Can both divorced parents see the kids' accounts in MemoryBank?

Yes. The parent who set up the family can invite a co-parent, and both see each child's connected accounts. That visibility doesn't change who legally controls the accounts.

What to do next

1. List every account in each child's name, with its custodian or owner.
2. Bring that list to your family-law attorney before the settlement is drafted.
3. Update successor custodian and successor owner forms once the divorce is final.