11 KAR 17:060. Amendment of a prepaid

tuition contract.

 

      RELATES TO: KRS 164A.700, 164A.707, 26

U.S.C. 529

      STATUTORY AUTHORITY: KRS 164A.704(1),

(6), 164A.707(2)(e), 2003 Ky. Acts ch. 156, Part IX, Sec. 46, EO 2003-652

      NECESSITY, FUNCTION, AND CONFORMITY: KRS

164A.704(1) requires the board to promulgate administrative regulations to

implement KRS 164A.700 to 164A.709. KRS 164A.704(6) provides that the board

shall develop requirements, procedures, and guidelines regarding prepaid

tuition contracts. KRS 164A.707(2) authorizes a purchaser to amend certain

terms of a prepaid tuition contract, including provisions of the prepaid

tuition contract as permitted by the board. 2003 Ky. Acts ch. 156, Part IX,

Section 46, and EO 2003-652 transferred the governance and administration of

the Prepaid Tuition Program from the Department of Treasury to the Kentucky

Higher Education Assistance Authority. This administrative regulation

establishes the requirements for amending a prepaid tuition contract.

 

      Section 1. Amendments in General. Any

purchaser desiring to make an amendment to a prepaid tuition contract as

authorized in KRS 164A.707(2) shall submit a written request accompanied by the

applicable administrative fee established in 11 KAR 17:100 to the office and

comply with all other applicable procedures relating to the amendment. A

requested amendment shall be subject to, and become effective upon, approval by

the office.

 

      Section 2. Change in Beneficiary. (1) In

accordance with KRS 164A.707(2)(a), a purchaser may amend a prepaid tuition

contract to change the qualified beneficiary at any time.

      (2) In submitting a written request to

change the qualified beneficiary, the purchaser shall include proof of Kentucky

residency or a statement of intent for the new beneficiary as required under 11

KAR 17:040, Section 2, and sufficient documentation evidencing the relationship

between the new and current beneficiary of the prepaid tuition contract.

      (3) If amendment to a prepaid tuition

contract changes the projected enrollment date of a qualified beneficiary, the

purchaser shall pay the additional amount necessary to properly fund the

amended prepaid tuition contract, as determined by the office. The office shall

notify the purchaser of any additional amounts due and owing under the amended

prepaid tuition contract.

 

      Section 3. Change in Purchaser. A request

for a change in purchaser shall comply with the requirements established in

this section, 26 U.S.C. 529 and regulations thereunder.

      (1) A purchaser may assign ownership of

the prepaid tuition contract to a successor purchaser upon acceptance of the

office. The assignment shall only be effective if the assignment:

      (a) Is to a purchaser as defined in KRS

164A.700(13);

      (b) Is irrevocable;

      (c) Fully and completely assigns all

ownership rights, title and interest including, without limitation,

reversionary rights and powers of appointment (i.e., power to substitute

beneficiaries) and the right to direct the distribution of benefits; and

      (d) Is in writing with notarized signature

of the purchaser and is accepted by the office.

      (2) Upon the death, disability, or

marital dissolution of a purchaser, an assignment of ownership, and all rights

and obligations of a prepaid tuition contract, shall be made in accordance with

this section.

      (3) Sufficient documentation of the

purchaser’s death, disability, or dissolution of marriage shall be submitted to

the office, and the successor-in-interest shall accept the status as

successor-in-interest by notarized signature.

      (4) A purchaser shall have the right to

designate a successor-in-interest to retain all rights and interest in his

prepaid tuition contract upon his death. Upon the death of a purchaser, all

rights and obligations of the purchaser under a prepaid tuition contract shall

be assigned to the named individual or entity as stated in the purchaser’s

written designation accepted by the office. Absent written designation accepted

by the office, the purchaser’s prepaid tuition contract shall be assigned to

the purchaser’s surviving spouse.

      (5) Upon disability of a purchaser, all

rights and obligations of the purchaser under a prepaid tuition contract shall

be assigned to the named individual or entity as stated in the purchaser’s

written designation accepted by the office. Absent written designation, the

purchaser’s duly appointed attorney-in-fact or court ordered legal guardian or

conservator, if applicable, shall become the purchaser’s successor-in-interest.

Sufficient documentation evidencing the purchaser’s attorney-in-fact or legal

appointment of guardian or conservator shall be submitted to the office.

      (6) A purchaser’s prepaid tuition

contract may be assigned upon the marital dissolution of a purchaser and his

spouse in accordance with a court order assigning the prepaid tuition contract

in a form accepted by the office. Upon the dissolution of marriage of a purchaser,

all rights and obligations of the purchaser under a prepaid tuition contract

shall only be assigned pursuant to a court order assigning the prepaid tuition

contract to the purchaser’s exspouse.

      (7) Any assignment of a prepaid tuition

contract in accordance with this section shall be considered valid upon

approval by the office and the assignee shall then become the purchaser of the

prepaid tuition contract with all rights and obligations of the original purchaser.

Upon the valid assignment of a prepaid tuition contract in accordance with this

section, the prior purchaser shall retain no rights or interest in the prepaid

tuition contract. (30 Ky.R. 760; Am. 1195; eff. 12-1-2003.)