Vaidik, C.J.
Case Summary
While David Miller (“Father”) and Joy Brown (“Mother”) were married, Father opened two college savings accounts in his name, designating the couple’s two sons as the beneficiaries. After the couple divorced, Father continued making contributions to those two accounts, and Mother opened two additional accounts in her own name with the boys as the beneficiaries. The older son enrolled in college but eventually withdrew. At issue in this case is the trial court’s order requiring Father and Mother to, among other things, combine all the savings accounts into a single, jointly owned account for the benefit of the younger son. Father appeals. He says he has no objection to paying his share of his son’s college expenses but argues that the funds in the accounts he opened are his property and that the trial court lacked authority to make Mother a co-owner. We agree with Father, reverse the order in its entirety, and remand for further proceedings.
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Husband does not challenge the part of the order requiring him to contribute to N.M.’s college expenses, the part calling for the 529 funds to be exhausted upfront (even though about 80% of those funds, roughly $46,000, would come from him and only about 20%, just over $11,000, would come from Mother), or the part requiring him to pay 45% after the 529 funds are exhausted. His only argument is that the trial court erred by ordering the creation of a single, jointly owned 529 account. He expresses concern that if N.M. stops going to school, Mother will have the same access to the remaining funds as he does, even though he has contributed a much larger amount. Father asserts that the funds in the 529 accounts that are in his name are his property and that by directing him to place those funds into a 529 account jointly owned by Mother, the trial court has ordered a post-dissolution distribution of property, something that the trial court “does not have authority to do.” Appellant’s Br. p. 9. Whether a trial court has authority to take a given action is a question of law that we review de novo. Howard v. Am. Family Mut. Ins. Co., 928 N.E.2d 281, 283 (Ind. Ct. App. 2010); Christenson v. Struss, 855 N.E.2d 1029, 1032 (Ind. Ct. App. 2006).
As a threshold matter, Mother attacks the premise underlying Father’s argument—that the funds in the 529 accounts are his property. She maintains that the funds are “the individual property of [Z.M.] and [N.M.]” and are merely being “held in trust” by Father. Appellee’s Br. pp. 4, 16-17. She is incorrect. While there is no dispute that the accounts were opened with the intent of benefitting Z.M. and N.M., the fact remains that Z.M. and N.M. are merely the designated beneficiaries of the accounts. Father is the owner, as the account documents make clear. See Pet. Ex. C; Resp. Ex. 5. Mother cites no evidence or authority for the proposition that a 529 account is a “trust” or that the beneficiary of a 529 account is the true “owner” of the funds. To the contrary, the 529 statute specifically contemplates changes in beneficiaries. 26 U.S.C. § 529(c)(3)(C). The funds in Father’s 529 accounts are not owned by Z.M. and N.M. [Footnote omitted.]
Alternatively, Mother argues that even if the funds are Father’s property, the trial court was authorized by Indiana law to make her a co-owner. Again, we disagree….
Mother’s reliance on Indiana Code section 31-16-6-3 and decisions interpreting it is similarly misplaced….None of the cases involved a post-dissolution order making one parent a co-owner of property owned by the other. The trial court here erred in entering such an order. [Footnote omitted.]
We understand Mother’s concern. She and Father contributed thousands of dollars to two 529 accounts while they were married, but the accounts were in Father’s name, so they stayed with him when the parties divorced, and now Father has apparently failed to pay a share of certain expenses. Much of her frustration could have been avoided, of course, if she had specifically addressed the 529 accounts at the time of dissolution, either by trying to reach an agreement with Father or by raising the issue with the trial court….
But this is not the end of the line for Mother. While we are constrained to vacate the order requiring the parties to create a single, jointly owned 529 account, we must also remand this matter for a new ruling on Mother’s petition for payment of N.M.’s college expenses. In doing so, we remind the trial court of its authority to “set apart” part of Father’s property, including his 529 accounts, for purposes of securing his contribution to N.M.’s college expenses. Notably, Father evidently would not object to such an order; his only concern is with making Mother a co-owner of his property. See Appellant’s Br. pp. 8-9. We leave it to the trial court to determine in the first instance the most appropriate alternative to that approach. [Footnote omitted.]
Reversed and remanded. Mathias, J., and Crone, J., concur.