In most cases, Divorce is a time-consuming affair that often requires multiple meetings with the attorney and sorting out the details of alimony, the division of assets and child support. Most divorcing partners are pre-occupied with the sudden new changes that are occurring in their life and amidst all this confusion, the one topic that is frequently neglected is life insurance. It is highly recommended that when negotiating a divorce settlement one also include life insurance, and for good reason.
Life insurance to pay alimony/child support
In many divorce cases, judges in Florida do require that the divorcing spouse who will financially support the other ex-spouse acquire a life insurance policy to ensure that his or her financial obligations are met, in case he/she dies prematurely. The theory behind this application is that if the receiving spouse is experiencing hardship and if the paying spouse prematurely dies, then this could cause a real financial problem for the former recipient ex-spouse. Thus, if there is a life insurance policy, then the receiving spouse could get that money. As a result, it is quite common during a divorce in Florida to include a provision for one spouse to acquire and maintain a life insurance policy in an amount that will cover spouse and/or child support in the event that one ex-spouse passes away.
How large should the life insurance policy be?
When calculating the amount of life insurance to have, it is important to consider the cost of future post-secondary education for the child, if you are already obligated to pay for these expenses currently. In addition, the life insurance policy must have a minimum amount of money to sustain the ex-spouse’s current lifestyle. In Florida, the divorce court judge cannot force the ex-spouse to maintain a life insurance policy in an amount that is greater than the amount of alimony and/or child support that he or she is has been already ordered to pay. Thus, it is vital that during the divorce proceedings that your lawyer negotiate with your ex about the total amount of the life insurance.
What problems can arise with life insurance and divorce?
While the idea of an ex-divorcing partner having life insurance is a practical idea with several benefits for the ex-recipient spouse and children, it is also associated with a number of problems. The first is that the ex-spouse may only make payments on the life insurance policy for a few months or several years and then stop paying the premiums without you ever knowing that the coverage has lapsed; many surviving spouses only find out about the lapsed policy after the ex-donor spouse has passed away. To avoid this situation, during the divorce settlement you should ask your attorney to discuss with your ex’s attorney of having you on the life insurance policy as a contact person and to notify you when payments become delinquent. The policy should also state that you are the beneficiary and to notify you if any names changes are done. The majority of insurance companies will be more than glad to keep in touch with you as they want to ensure that the premiums are being paid and the policy remains active.
When should one of the ex-spouse get the life insurance policy?
It is highly recommended that the donating ex-spouse get the required life insurance policy before the final divorce settlement in court. You want to get all the paperwork done before the divorce is finalized. This avoids hassles. When one tries to obtain a life insurance policy late, the insurer may deny the policy for a variety of reasons including a chronic illness or the premiums may be too high. Thus, it is essential to get all these details sorted out prior to coming to the divorce court. When you come to court you should have the valid insurance policy in hand, which makes things a lot easier for both parties.
What happens if my ex-spouse gets remarried?
One very common problem that often arises is when the ex-remarries and makes his or her NEW spouse the beneficiary of the life insurance policy, leaving you out. Your ex-spouse does have the power to add or delete beneficiaries without any prior to notice to prior beneficiaries. One way to solve this problem is to insist to the ex as soon as the divorce is being contemplated to name you as the owner of the policy. But at the same time make the ex-responsible for the premiums. If you are on the life insurance policy as the owner, then you also retain the right to change the beneficiary. At the same time, you will also become aware if the ex is keeping up with the payments.
Can my ex-spouse refuse to add my name to the insurance policy?
When a divorce is taking place there is usually bitterness between the two divorcing partners. Hence, it is hardly likely that one ex-spouse will name you as a beneficiary or have your name as the policy holder. Thus, the importance of having an attorney negotiate on your behalf. At the same time, you should try to do things which are mutually beneficial for both of you and not intentionally create any animosity with your ex. Remember, the divorce court judge can only insist on a life insurance policy; he or she cannot force the ex-spouse to put your name as the beneficiary or the policy-holder. Thus, the importance of a lawyer who can reach out to the other party and convince them to have you as a policy holder. It is important to be aware that divorces are often contentious and both spouses may carry a grudge or bitterness towards each other. But if you want to be named as the policy-holder, try and remain calm because, in the long run, it will be to your benefit. Once your name is on as a policy owner, it cannot be removed without your permission.
Can I have a third party as a custodian of the life insurance policy?
Because the ex-spouse may not be willing to put his/her ex on the life insurance policy as a beneficiary, you may ask if he or she is willing to name a third party as a custodian-such as a lawyer, friend or colleague. But in these scenarios, you must completely trust this person. What if the ex-spouse dies and this trusty keeps the money from the life insurance policy for him or herself? So trust is vital when you select a third party entity to be on the life insurance policy.
The policy will pay into the trust when the ex-spouse dies and the designated trustee will then handle the money until the minor child reaches age 18. You can spell out in a trust how you want the money dispersed.
Why do I need a lawyer just for life insurance?
Divorce is a complex procedure where there are money and children issues to be resolved. In many cases, the divorce court may decide that the ex-spouse has a life insurance to cover any obligation for the ex-spouse and/or the children. To ensure that your ex-spouse fully complies the life insurance premiums and make you a policyholder does require assistance from a lawyer, who can negotiate on your behalf. In most cases, the two ex-spouses will rarely be speaking to each other, so it is best to let the attorney mediate your interests. Plus having an attorney skilled with the divorce procedure takes away the stress and saves you an enormous amount of time.
