H.F. 429 Section 1. NEW SECTION . 12I.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Beneficiary” means the individual designated by a 4 participation agreement to benefit from a child support 5 diversion savings account. 6 2. “Higher education costs” means the certified costs of 7 tuition, fees, books, supplies, and equipment required for 8 enrollment or attendance at an institution of higher education. 9 Reasonable room and board expenses, based on the minimum amount 10 applicable for the institution of higher education during the 11 period of enrollment, shall be included as a higher education 12 cost for those students enrolled on at least a half-time basis. 13 In the case of a special needs beneficiary, expenses for 14 special needs services incurred in connection with enrollment 15 or attendance at an institution of higher education shall be 16 included as a higher education cost. 17 3. “Institution of higher education” means an institution 18 described in section 481 of the federal Higher Education Act of 19 1965, 20 U.S.C. §1088, which is eligible to participate in the 20 United States department of education’s student aid programs. 21 4. “Participant” means an individual who has been ordered by 22 the court to divert a portion of the individual’s child support 23 obligation to a savings account for a child pursuant to section 24 598.21H. 25 5. “Participation agreement” means an agreement between a 26 participant and the trust entered into under this chapter. 27 6. “Trust” means the child support diversion trust 28 established under section 12I.2. 29 7. “Tuition and fees” means the quarter or semester charges 30 imposed to attend an institution of higher education and 31 required as a condition of enrollment. 32 Sec. 2. NEW SECTION . 12I.2 Creation of child support 33 diversion trust. 34 The treasurer of state shall establish a child support 35 -1- LSB 2404HH (7) 86 pf/nh 1/ 6

H.F. 429 diversion trust, shall act as the trustee of the trust, and 1 shall have all powers necessary to carry out and effectuate the 2 purposes, objectives, and provisions of the trust including the 3 power to do all of the following: 4 1. Make and enter into contracts necessary for the 5 administration of the trust. 6 2. Carry out the duties and obligations of the trust 7 pursuant to this chapter. 8 3. Procure insurance against any loss in connection with the 9 property, assets, or activities of the trust. 10 4. Enter into participation agreements with participants. 11 5. Make distributions to a beneficiary of the trust pursuant 12 to the provisions, limitations, and restrictions set forth for 13 access to and use of the moneys by the beneficiary in an order 14 of the court pursuant to section 598.21H. 15 6. Invest moneys from the trust in any investments which are 16 determined by the treasurer of state to be appropriate. 17 7. Engage investment advisors, if necessary, to assist in 18 the investment of trust assets. 19 8. Establish, impose, and collect administrative fees and 20 charges in connection with transactions of the trust, and 21 provide for reasonable service charges, including penalties for 22 cancellations and late payments with respect to participation 23 agreements. 24 9. Administer the funds of the trust. 25 10. Adopt rules pursuant to chapter 17A for the 26 administration of the trust. 27 Sec. 3. NEW SECTION . 12I.3 Participation agreements for 28 trust. 29 The trust may enter into participation agreements with 30 participants on behalf of beneficiaries pursuant to the 31 following terms and agreements: 32 1. a. Each participation agreement shall require a 33 participant to agree to contribute a specific amount on behalf 34 of a specific beneficiary in accordance with the order of the 35 -2- LSB 2404HH (7) 86 pf/nh 2/ 6

H.F. 429 court issued pursuant to section 598.21H. 1 b. A participation agreement may be amended to provide for 2 changed circumstances as provided in an order modifying an 3 order issued pursuant to section 598.21H. 4 2. Each participation agreement shall provide that the 5 participation agreement may be canceled upon modification of an 6 order issued pursuant to section 598.21H directing cancellation 7 of the participation agreement and upon payment of applicable 8 fees and costs set forth and contained in the rules adopted by 9 the treasurer of state. 10 Sec. 4. NEW SECTION . 12I.4 Deposit of moneys in trust —— 11 investment —— assets of the trust. 12 1. All moneys paid by a participant in connection with a 13 participation agreement shall be deposited as received into a 14 separate savings account within the trust. 15 2. A participant or beneficiary shall not provide 16 investment direction regarding contributions to a savings 17 account or earnings held by the trust. 18 3. All income derived from the investment of the 19 contributions made by the participant shall be considered to be 20 held in trust for the benefit of the beneficiary. 21 4. The assets of the trust shall at all times be preserved, 22 invested, and expended solely and only for the purposes of 23 the trust and shall be held in trust for the participants and 24 beneficiaries. 25 5. No property rights in the trust shall exist in favor of 26 the state. 27 6. The assets of the trust shall not be transferred or used 28 by the state for any purposes other than the purposes of the 29 trust. 30 Sec. 5. NEW SECTION . 598.21H Child support diversion for 31 establishment of savings account. 32 1. Order for savings account. The court may order a portion 33 of a party’s child support obligation to be diverted to a 34 savings account for the child as provided in chapter 12I. 35 -3- LSB 2404HH (7) 86 pf/nh 3/ 6

H.F. 429 2. Diverted amount payable. The diverted amount shall be 1 payable to a savings account established pursuant to chapter 2 12I. 3 3. Criteria for diversion to savings account. The court 4 may order that a portion of a party’s child support obligation 5 be diverted to a savings account for the child as provided in 6 chapter 12I if all of the following conditions are met: 7 a. The custodial and noncustodial parents agree to the 8 diversion of the portion of the child support obligation. 9 b. The net monthly household income of the custodial 10 parent equals at least one hundred ten percent of the monthly 11 allowable living expenses for the area in which the custodial 12 parent resides. 13 c. The portion of the child support obligation to be 14 diverted does not exceed three percent of the child support 15 obligation amount. 16 4. Criteria for access to and use of the funds in the savings 17 account. 18 a. Access to and use of the funds in the savings account 19 shall be restricted as specifically provided in the order to 20 meet the needs of the child. 21 b. Unless an exception applies as specified in paragraph 22 “c” , the child shall only have the following access to the funds 23 in the savings account for the following uses: 24 (1) Access at the age the child has attained upon enrollment 25 in an institution of higher education for payment of the 26 child’s higher education costs. 27 (2) Access when the child attains twenty-five years of age 28 for any purpose. 29 c. The court may provide in the order for alternative access 30 to and use of the funds in the savings account by the child or 31 may modify the order and allow alternative access to and use 32 of such funds other than as provided in paragraph “b” , once the 33 child reaches eighteen years of age or is emancipated, if the 34 court determines the child has excessive medical expenses or 35 -4- LSB 2404HH (7) 86 pf/nh 4/ 6

H.F. 429 other circumstances deemed by the court to be appropriate for 1 access to and use of the funds in the savings account. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill provides for the establishment of a child 6 support diversion trust by the treasurer of state. The bill 7 authorizes the treasurer to establish the trust, provides for 8 the powers of the treasurer relating to the trust, specifies 9 the requirements for participation agreements under the trust, 10 and provides for deposit of contributions, which are amounts 11 of child support obligations diverted from payment as child 12 support to instead be placed in a savings account for future 13 access to and use by a child. 14 The bill provides for the issuance of court orders to divert 15 a portion of a child support obligation to a savings account 16 for the child. The bill provides that the amount diverted is 17 payable to the savings account established by the treasurer. 18 The criteria for diversion of a portion of the child support 19 obligation are that the custodial and noncustodial parents 20 agree to the diversion; the net monthly household income 21 of the custodial parent equals at least 110 percent of the 22 monthly allowable living expenses for the area in which the 23 custodial parent resides; and that the portion of the child 24 support obligation to be diverted does not exceed 3 percent 25 of the child support obligation amount. Criteria for access 26 to and use of the funds by the child are to be restricted as 27 specifically provided in the order to meet the needs of the 28 child. Unless an exception applies, the child is to only 29 have access to the funds when the child attains the age for 30 enrollment in an institution of higher education to be used 31 for higher education costs or when the child attains the 32 age of 25 and may then use the funds for any purpose. The 33 bill provides, however, that the court may provide in the 34 order for alternative access to and use of the funds in the 35 -5- LSB 2404HH (7) 86 pf/nh 5/ 6

H.F. 429 savings account by the child or may modify the order and allow 1 alternative access to and use of such funds other than as 2 provided in the bill once the child reaches 18 years of age or 3 is emancipated, if the court determines the child has excessive 4 medical expenses or other circumstances deemed by the court 5 to be appropriate for access to and use of the funds in the 6 savings account. 7 -6- LSB 2404HH (7) 86 pf/nh 6/ 6