Individual Trust Accounts (ITAs): A New Piece of the INDIANA Divorce Puzzle
For families in Indiana navigating a divorce, the financial landscape just got a significant new player: Individual Trust Accounts (ITAs). Established under the One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, these accounts – also informally called "Trump Accounts," "Baby Bonus Accounts," or "Child Savings Accounts" – are set to change how we think about a child's financial future, and how those future needs might be addressed in Indiana divorce settlements.
What Are ITAs?
A Federal Kickstart: For Indiana children born between 2025 and 2028, a $1,000 federal deposit automatically opens their ITA.
Family & Employer Contributions: Hoosier parents, relatives, and even employers can contribute up to $5,000 annually (after-tax). Certain governmental and charitable contributions are also permitted, often with no limit.
Tax-Deferred Growth: Money within an ITA grows without annual taxes, allowing it to compound significantly over time, a boon for long-term savings.
Future-Focused Use: While generally accessible at age 18 (when they transition into an IRA), ITAs are designed to fund key life milestones, potentially reducing the financial burden on parents for:
Higher education (college, trade school, etc.)
A first-time home purchase (up to $10,000)
Starting a small business
Certain emergency expenses
ITAs: Influencing Indiana Child Support
Indiana's child support calculations primarily use the Income Shares Model, aiming to ensure children receive the same proportion of parental income as if their parents were still together. The Indiana Child Support Guidelines consider factors like each parent's gross weekly income, number of children, childcare costs, health insurance premiums, and parenting time.
Here's how ITAs could interact with these established Indiana principles:
Addressing "Extraordinary Educational Expenses": Indiana courts already have the authority to order parents to contribute to post-secondary education expenses, separate from regular child support, typically until age 21.
Leverage: The existence of a robust ITA could be presented to an Indiana court as a pre-existing resource for these "extraordinary educational expenses." Parents might negotiate to contribute to the ITA in lieu of, or to offset, future direct payments for college, providing a clear and dedicated fund.
Shared Long-Term Planning: While child support covers ongoing needs, ITAs offer a structured way for both parents to share responsibility for a child's significant future expenses.
Negotiation Point: Indiana parents could agree to specific, regular contributions to the child's ITA as part of their divorce settlement. This formalizes a joint effort to build a nest egg, potentially reducing future disputes over college funding or other substantial costs that often emerge years down the line.
Parental Resources and "Ability to Pay": Indiana courts consider each parent's financial resources and needs. While ITA contributions are after-tax, a court could view consistent contributions as an allocation of discretionary income that directly benefits the child's long-term well-being.
Judicial Discretion: Indiana courts retain discretion to deviate from the Child Support Guidelines if applying them strictly would be unjust or inappropriate.
Opportunity: The presence and projected growth of an ITA could be a factor in arguments for such a deviation, particularly if it comprehensively addresses future needs that would otherwise require additional parental contributions.
The Bottom Line for Hoosier Families
ITAs are a significant development that adds a new layer to Indiana divorce and child support discussions. They provide a structured, tax-advantaged mechanism for saving for a child's future, which can directly influence how long-term expenses are addressed.
However, navigating these new accounts within Indiana's existing legal framework requires careful consideration. It is absolutely essential to consult with an experienced Indiana family law attorney, who can help you understand how ITAs might impact your specific situation under Indiana law.