Effective October 17, 2005, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 provides protection in federal bankruptcy proceedings for many 529 accounts.  Your account is protected if the beneficiary is your child, stepchild, grandchild, or step grandchild (including the children of the same relationship by adoption or foster care).  Contributions made before a federal bankruptcy to all 529 accounts for the same beneficiary are subject to the following limitations:

Length of time the 529 account is established prior to federal bankruptcy	Maximum $ Amount Protected
At least 720 days	All funds are completely protected
More than 365 days, but less than 720 days	Up to $5,000
Less than 365 days	None

Approximately twenty-six (26) states have provisions intended to protect 529 accounts from the claim of creditors of the account owner or the beneficiary.  529 programs and the state laws dealing with creditor protection of 529 accounts are relatively new.  Because of this “newness” there are not many court interpretations on issues relating to 529 accounts and creditor protection.  In many states there have been few or no court rulings or interpretations of the state’s creditor protection for 529 accounts.  Consult with an attorney regarding your specific situation.