Can Creditors Invade Qualified College Savings Plans?
by Jeffrey L. Kwall, J.D. Professor Kwall is the Kathleen and Bernard Beazley Professor of Law at Loyola University Chicago School of Law and is Of Counsel to Schwartz & Freeman. He teaches a course titled “Financial Planning for Lawyers and Clients.” Abstract Although the attractive tax and control features of qualified college savings plans have received much attention, surprisingly little light has been shed on whether the contributor s creditors can invade these plans. The author explores the risks to which college savings plans are exposed and surveys the level of protection offered by each state. Perhaps the most attractive savings vehicle for a child s college education is the relatively new breed of qualified state tuition program now offered by almost every state. Since 1997, state plans that satisfy the requirements of Internal Revenue Code Section 529 have offered parents and relatives at all income levels the opportunity to set aside up to $100,000 or more per child in high
