Insights

Who is the education fund saved for children in Ningbo when they get divorced?

Ningbo Author：LuXu WANG

Depositing education fund for children is the first thing many Ningbo families do after their children are born: children go to the bank to open an account at the full moon, deposit lucky money and red envelopes at the holidays, and parents agree to transfer a fixed sum of money to the bank every year; or simply buy an insurance policy with children as the insured, saying "leave a sum of money for children to study". However, once a couple reaches the point of divorce, disputes over this sum of money often arise more easily than those involving property or vehicles.

Someone confidently argued, “The account is in the child’s name, so of course the money belongs to the child.” “Some people still feel resentful: ‘The money was earned by both of us—why shouldn’t it be divided?’ To begin with, let me state this clearly: just because a child’s name is on a bank account doesn’t mean the money in that account belongs to the child.” The key to determining the education fund at the time of divorce is not the account name, but three things-who owns the money, what it means to save the money, and who is actually in charge of the money. The following follow these three questions.

The three most common forms of 1. education funds

What parents refer to as “educational funds” is not a single type of asset under the law; rather, it encompasses at least three distinct forms of property, each subject to markedly different rules regarding ownership. These must be examined separately.

  • Bank deposits and wealth management products opened in the child’s name.The account is registered under the child’s name, but the funds may have been jointly deposited by the parents, or they could be red envelopes and New Year’s money given by relatives. This type is the most common and also the most controversial.
  • Insurance with the child as the insured. The insured is often the father or mother, the insured, the beneficiary is the child. The policy includes a “cash value” that can be reclaimed upon surrender—this is the portion that truly holds monetary value.
  • A dedicated education fund account or education trust.The former involves a family‑internal agreement to earmark funds for a specific purpose, while the latter entails entrusting a sum of money to a trust company for the child’s use as stipulated in the contract. It has the most standardized form, yet its popularity remains low.

Among the three categories, the first two are the most common choices among Ningbo families and are also the ones most likely to give rise to disputes during divorce proceedings. Although the third category is rare, its classification rules are actually the clearest. Expand below one by one.

2. The first type: a deposit in the child's name.

The root of the controversy lies in what exactly the act of “placing the money in the child’s name” signifies. It may correspond to two completely different things: one is that parents give their common property to their children, and the money will belong to the children from now on; The other is only temporarily deposited in the child's account, and the essence of the money is still the parents. What the court is tasked with distinguishing are precisely these two.

(I) First, let's see where the money comes from: is it the child's, or the parents'?

The key to determining the matter lies in the source of funds and the original expression of intent.

  • Gifts and inheritances received by the child.For example, red envelopes received from relatives during the Spring Festival, gifts specifically given by grandparents to their grandchildren, and property inherited by children. This type of money has always been the child’s personal property; parents merely hold it in trust and it is not subject to division when marital assets are distributed upon divorce. Such determinations are relatively consistent in judicial practice.
  • It comes from the joint property deposited by the parents, and they have explicitly stated that it is a gift to the child.If both spouses agree and there is evidence to support it, the funds do indeed become the child’s personal property. It is not subject to division as marital property upon divorce but remains under the custody of the custodial parent.
  • It comes from the common property of parents, but it doesn't indicate that it is a gift or mixed in the name of "education fund account. Such assets are often deemed marital property and subject to division. Because the account name is merely a formality; it is the source and purpose of the funds that determine their nature.

(II) How is it determined in judicial practice?

In practice, many courts emphasize that “the ownership of funds cannot be determined solely on the basis of the account name” and that a comprehensive assessment must be made, taking into account the purpose for which the account was opened, the source of the funds, and their actual use. There was a case in Shenzhen where a couple, in order to secure their child’s future, opened an account in the child’s name and agreed to deposit a fixed amount each month as educational funds. Upon divorce, one party claimed that all the funds in the account belonged to the child as personal property and demanded that the other party return them. The court made a distinction: the part that the husband and wife deposit regularly and use for children's education, because the chat record shows that the original intention is family savings and emergency standby, and there is no clear agreement to give the child, is recognized as the way for parents to fulfill their obligation to raise, and does not belong to the child's personal property; However, the red envelope money deposited by the elders with remarks and time records is confirmed to belong to the child's personal property.

In another type of case, during a divorce, the couple agrees to transfer their joint savings to their minor children; later, one party reneges, claiming that the agreement was merely a compromise made to expedite the divorce and did not reflect their true intentions, and demands that the funds be returned. The court did not uphold the claim, reasoning that the gift was made between parties in a specific relational status and thus carried a moral obligation. Given that the marital relationship has already been dissolved and the other provisions of the agreement have been fulfilled, the gift cannot be revoked at will; otherwise, it would undermine the integrity of the divorce agreement and prejudice the rights and interests of the minor children.

As can be seen, the rules are not complicated: if the money originates from the child’s own earnings, it belongs to the child; if it comes from the parents’ joint property and there is a clear expression of intent to gift it, then it also belongs to the child; if it originates from joint property but there is no explicit gift, it remains, in principle, marital property subject to division.

(III) Who bears the burden of proof, and what evidence must be presented?

Whoever claims that this money is the child’s personal property must provide evidence. Common valid evidence includes: account opening information and long-term running water, transfer notes, chat records between husband and wife about "saving education funds for children", written explanations or witness testimony given by elders, inheritance documents of children, etc. Conversely, the party asserting that the funds constitute marital joint property may present evidence showing that the money originated from wages or business income, and that the account was also used for ordinary household expenses or frequently transferred funds to and from a personal account. Whose side the evidence is on often determines the outcome of the judgment.

3. The second type: insurance purchased for children

Insurance is more complex than deposits because it involves three roles: policyholder, insured, and beneficiary. Who the three parties are directly determines how the assets will be divided in a divorce. In Ningbo, the most common arrangement is for one parent to be the policyholder and the child to be the insured. In this situation, it is also necessary to distinguish between the “insurance premium” and the “cash value.”

(I) First, clearly identify the three roles and the cash value.

  • Insured: The person who signs the contract and pays the premium, and who is also entitled to receive the cash value upon policy cancellation.
  • Insured person: The person covered by this insurance policy; in this case, the child.
  • Beneficiary: The person who is entitled to receive the insurance benefit upon the occurrence of an insured event or the death of the insured.

It’s important to remember that, in the context of divorce, what truly has monetary value is the policy’s cash surrender value—the amount you can receive upon cancellation of the policy—which typically belongs to the policyholder. When parents purchase insurance for their children, the premiums are usually paid from the couple’s joint property, so disputes often center on whose share the policy’s cash value belongs to.

(II) Insuring the child with joint marital property after marriage

The prevailing practice in judicial proceedings is to determine who the policyholder and the insured are: if, during marriage, one spouse insures a minor child and neither spouse objects, most courts regard this as a gift from both spouses to the child and do not include it in the division of marital property; the insurance policy remains in effect for the child. This is also the basis for why many parents believe that “the insurance policies they purchased for their children cannot be affected in a divorce.”

However, “not to be divided as joint property” does not mean that anyone can freely dispose of it. If the policyholder unilaterally cancels the insurance policy and withdraws the surrender value (i.e., the cash value), that amount will be deemed marital property, and the other spouse is entitled to half of it. In practice, there have been cases where one party, after taking out an insurance policy for their child, unilaterally canceled the policy and withdrew over 100,000 yuan in surrender proceeds. The court ruled that these surrender proceeds constitute marital joint property and ordered that half of the amount be awarded to the other party. What's more serious is that if the insurance policy has been regarded as a gift to the child, and the guardian withdraws the insurance without authorization for the benefit of the child, it may also constitute an infringement of the child's property rights and interests, and the child has the right to claim compensation.

(III) Exceptions for the period of separation or unauthorized large-scale insurance purchases

There are two situations, the attitude of the court will turn to "division". First, the husband and wife have separated, the relationship has indeed broken down, one party with the common property for the child large insurance, the other party does not agree, the court may not recognize the gift, but according to the actual payment of insurance premiums divided. Second, if the issue was not addressed at the time of divorce but is discovered afterward—such as when one party concealed insurance policies and used marital property to pay the premiums—the premiums can still be subject to division upon request. It can be seen that "insuring children" is not a shield for transferring property.

(IV) Surrender the policy or continue paying premiums?

For insurance policies that have not yet matured at the time of divorce and involve young children, there are typically two options: one is to continue the policy, with the paying party making the premium payments and the cash value being retained in its entirety for the child; the other is to surrender the policy, withdraw the cash value, and divide it as joint marital property. From the perspective of protecting your child, keeping the policy in force better aligns with the original purpose of “educational funds” and also helps avoid losses that could result from surrendering the policy. Who will be the policyholder, who will pay the subsequent premium and how to manage the policy are all suggested to write clearly in the divorce agreement and do not leave a verbal agreement.

4. the third type: education fund trust

In recent years, some families have begun using education trusts to plan for their children’s long-term expenses: the settlor entrusts a sum of money to a trust company, designates the child as the beneficiary, and stipulates that funds will be disbursed in installments at specific ages or for specific purposes (such as continuing education or studying abroad). Its biggest feature is the independence of trust property-once established, the money is legally separated from the client's personal property and the joint property of the husband and wife, and no longer belongs to either party of the husband and wife.

This gives rise to two consequences: first, at the time of divorce, it is not subject to division as marital property, and, in principle, neither spouse is entitled to a share; second, even if the settlor subsequently incurs debts or becomes bankrupt, the trust property generally cannot be reached by creditors (except in cases where the law provides otherwise). Because of the strong isolation effect, the establishment should pay more attention to the true meaning, the legal source of the property, the beneficiary arrangement is clear, otherwise it may be considered as a malicious transfer of property. For most families, the threshold for establishing a trust is relatively high, but it is a way to institutionalize the principle of “this money is solely for the children.”

How to deal with 5. divorce

Unify the first three categories, and the processing logic is actually a main line: first decide who owns the money, and then talk about how to divide it.

  • Has been explicitly gifted to the child and has a lawful source.: Property belonging to the child shall not be included in the division of marital joint property and shall be managed by the parent with whom the child is living, but may not be disposed of at will.
  • Not explicitly designated as a gift, and the source is marital joint property.: It shall be treated as marital joint property, to be divided by agreement between the parties; if no agreement can be reached, the court shall make a judgment based on the specific circumstances of the property and in accordance with principles that take into account the interests of the children and the rights and interests of the wife.
  • Insurance property: the insurance policy that has not been divided as common property, the focus is on "not allowed to surrender the insurance without authorization"; if it is to be divided, the cash value or the paid insurance premium is generally divided.
  • trust property: due to the independence of trust property, it is not included in the division of divorce property in principle.

One more point to note: Whom the child custody is granted to will affect the actual management of the education fund, but it will not change the ownership of the funds. Custody determines “who will have care and custody and with whom the child will live,” while ownership addresses “to whom the money belongs.” The custody of the child's property can only be used for the benefit of the child and cannot be spent as his own money. If the economic situation of the direct dependant changes significantly, the child can also claim alimony separately, which is two lines with the ownership of education funds.

6. Other exclusive property under the child's name

In addition to education funds, children often have certain exclusive assets that are easily overlooked: New Year’s red envelopes and gifts from relatives, inherited property, and gifts specifically given to the child by others. These assets have one thing in common— Ownership belongs to the child, and the parents are only legal representatives and custodians。

The law provides clear restrictions in this regard: the guardian’s duty is to protect the property rights of the ward, and except where necessary to safeguard the ward’s interests, the guardian may not dispose of the ward’s property. In other words, a child’s money can only be spent on the child—such as for tuition, medical expenses, or improving living conditions—and must not be used to pay off the parents’ personal debts or to buy the parents a car. In reality, some parents took nearly 300,000 yuan from their children's names for their own use, and the children or the other party claimed to return it. The court supported the return. In 2024, there was also a case published by the court. When the couple divorced, they asked to divide the two children's lucky money of more than 200,000 yuan, which was rejected. It was clear that the lucky money was not the common property of the couple, and the parents had no right to divide it as guardians and could only manage it on their behalf.

7. Three Common Misconceptions

Myth 1: “The account is in the child’s name, so it belongs to the child.”

The account name is merely a formality, not a conclusion. The true criterion for determination lies in the source of the funds and the original expression of intent; where accounts are commingled and the funds primarily derive from the couple’s joint property, such assets may still be deemed marital property.

Myth 2: "Money given to children can be taken back when they are divorced"

If the gift has been clearly made to the child and the child has accepted it, the money belongs to the child, and the parents may not revoke it at will. If a divorce agreement stipulates that joint property is to be awarded to the children, and one party later reneges on this agreement, the court will generally not uphold such a reversal, unless there are legally prescribed grounds for rescission.

Myth 3: “A child’s money can be spent however you like.”

No. Except where necessary to safeguard the child’s interests, the guardian may not dispose of the child’s property. Unauthorized withdrawal, policy cancellation, or misappropriation may result in liability to the other party and could also give rise to a claim for damages by the child themselves.

8. Practical Recommendations

  • When saving money, make your intentions clear and keep a record.If you genuinely intend to give money to your child, it is best for both parties to confirm this in writing, or to clearly indicate in the transfer remarks or chat records that “this is a gift to the child.”If it is only temporarily stored and managed, it should also be explained accordingly to avoid saying different things in the future.
  • Special account for exclusive use, don't mix it up. The child's account only enters the child's money and only the child's expenses, avoiding frequent transfers with the family's daily expenses and personal accounts, otherwise it is easy to be identified as a family or husband and wife.
  • Insurance has three roles to figure out. The insured, the insured and the beneficiary shall make clear arrangements and try not to insure large amounts during the period of emotional breakdown.
  • The divorce agreement is written in detail. The ownership of education funds, the holding and payment of insurance, and who will take care of the property under the child's name are all written into the agreement to avoid the "oral agreement" that cannot be implemented in the future.
  • Consider a more standardized arrangement. If the amount is large and you want to lock it in for a long time, you can evaluate the establishment of an education fund trust and use the system to fix "only for children.

9. FAQ

Question 1: Do you have to share the savings in your child's name when you divorce?

Not necessarily. It depends on the source of the money and the original meaning. Is the child's gift, inheritance income, is the child's; Is the common property of parents and clear meaning of gift, is also the child; The source is the common property and no clear gift, in principle will be included in the division of the joint property of husband and wife.

Question 2: Can the cash value be divided when the child's insurance is divorced?

It depends on who made the move. If the minor children are insured within the marriage and both parties have no objection, the majority of the courts shall regard it as a gift to the children and shall not be divided. However, if one party withdraws the insurance without authorization, the surrender payment is usually treated as the joint property of the husband and wife, and the other party may claim half of it.

Question 3: Why is the money in the “education fund account” considered marital joint property?

Because this kind of accounts are usually deposited by parents on a regular basis and used for family savings or daily expenses, the source of money is common property, and the purpose is not a clear gift, but a way to fulfill the obligation of raising, so it is easy to be identified as common property.

Question 4: Can one party go back on its promise to give the money to the children in the divorce agreement?

Generally not. In the divorce agreement, the donation of common property to minor children is integrated with the dissolution of marriage, child support and division of property. When the marriage has been dissolved and other contents have been fulfilled, the donation cannot be revoked at will.

Question 5: Who owns the custody of the child and is it related to the ownership of the education fund?

has a relationship but cannot draw an equal sign. Custody determines who manages the finances and with whom the child will live, but it does not alter ownership of the funds. The custody of the child's property shall be used only for the benefit of the child.

Question 6: During a divorce, is a child’s New Year’s red envelope money considered marital joint property?

Not really. New Year's money and red envelopes belong to gifts from elders to children. Ownership belongs to children. Parents have no right to demand division as guardians and can only manage them on their behalf.

10. Practical Insights from a Lawyer

Parents are most likely to get caught in the dispute of "who is the account name" first, but in practice, I will ask the parties to answer three questions: where did the money come from, what did it mean when it was deposited, and who is actually in charge. Having an account under the child's name does not mean that the money in it belongs to the child. What really determines the ownership is the source of funds and the original meaning. Therefore, the first step is not to quarrel, but to find out as much as possible the traces of the family's money deposited in this account over the years, including the transfer records, the contents of the agreed transactions, and the explanations given by the elders. The facts should be laid down before the talks can be carried out.

Next, prepare separately according to the form. Bank deposits to transfer water, look at the source and law of each money; to buy insurance for children to find the policy, to find out the insured, the insured, the beneficiary and the withdrawal of the cash value, this part is often the real value. For the part that "comes from the common property of parents and does not say clearly that it is a gift", we should be psychologically prepared that it is likely to be pulled into the division. Therefore, we should pay attention to who is keeping it and who is withdrawing it. We should not wait until divorce to find out that the money has been taken away in advance.

the amount of such disputes may not be very large, but it is the most likely to hurt feelings, because it contains love for children. During the negotiation, the "nature of the money" and the "actual needs of the children" can be discussed separately: if the attribution is not clear for a while, an arrangement acceptable to both parties and earmarked funds for the education of the children should be established first, and the withdrawal method should be specified to avoid one party's nominal escrow and actual misappropriation. I would also like to remind those who want to keep their common property in the name of their children that it may not be cost-effective to carry them hard. If necessary, please ask professionals to review the terms before signing them.

Let's go back to the question at the beginning: Who will be counted as the educational fund for the children when they get divorced? The answer depends on three variables-who owns the money, what it means to save the money at the beginning, and who is actually in charge of the money. Deposits in the name of the child mainly depend on the source of funds and the meaning of the gift; insurance with the child as the insured mainly depends on the three roles and the attribution of cash value; the education fund trust is basically not divided into divorce because of the independence of the property. The child's lucky money, inheritance and donated property are always owned by the child, and the parents are only the escrow.

The advice to parents is very simple: before saving money, first think about who the money will be given to, and put the meaning on paper and records; The child's account is earmarked for special purposes, not mixed with family expenses; Insurance and trust arrangements clarify the role and write into the agreement; The property involving children should be managed according to the principle of "the most beneficial to children", not according to the parents' own needs. In this way, even if the relationship between husband and wife changes, the child's share of security will not be involved in disputes.