All of us want to send our children to college, providing them with the ability to enter, or remain, in the middle class. Yet as parents, this is becoming ever harder. To try and help parents pay for their children's college education, the State of Wisconsin has created two 529 college savings plans: Edvest, and Tomorrow's Scholar. Both plans allow parents to set up investment accounts that allow funds to grow tax free. This maximizes the amount available for college and minimizes tax liability. These funds can be used for tuition, fees, books, and room and board at qualifying universities. For more information on the programs, go to the State of Wisconsin's 529 site, Edvest's site, or Tomorrow's Scholar's site.
In a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy, protecting these accounts can be tricky. Although the Wisconsin Legislature attempted to provide blanket protection for all 529 accounts in Section 815.18(3)(p) of the Wisconsin Statues, some courts have held that the statute was poorly constructed and a literal reading of the statute provides no protection. Currently this is on appeal with the Seventh Circuit. However, if a child (student) files Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, the 529 accounts are fully protected from creditors. In general, a competent bankruptcy attorney can protect most 529 accounts in Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.
State of Wisconsin 529 Plan