Can the trustee take my child’s college money?

If you file a Chapter 7 bankruptcy, your trustee may be able to take the money you put into an education account unless the account meets certain requirements.  The trustee cannot trust the account if:

1. I t is for your child, stepchild, grandchild, or step-grandchild.  If the account is anyone else, the trustee may be able to take the money.
2. The money in the account was deposited there over 2 years before you filed.
3. If you deposited the money more than one year before filing, but less than 2, only $5,000 can be protected and your trustee can take the rest.
4. Any money deposited in the account less than a year before you file can be seized by your trustee.

Of course, if you have money in a 529 account that cannot be exempted, you may be able to exempt it under the applicable federal or state wildcard.