Wording Divorce Settlement Awarding Ownership of Life Insurance Policy

[sparklyu]

Hi:

Was wondering if anybody had any wording/sample orders, preferably for FL, but any state will do, giving the wife ownership of a Life Insurance Policy that is written on the husband in a divorce. Husband had previously gone against court orders and cancelled said policy, which was reinstated by court order. Serious concerns that he would do it again based on past history.

Thanks.

 

[Allen Trent]

Hi:

Was wondering if anybody had any wording/sample orders, preferably for FL, but any state will do, giving the wife ownership of a Life Insurance Policy that is written on the husband in a divorce. Husband had previously gone against court orders and cancelled said policy, which was reinstated by court order. Serious concerns that he would do it again based on past history.

Thanks.

Only thing might be if the court orders ex wife to be the owner or orders the husband to list ex wife as irrevocable beneficiary or collateral assignee. This wont make it perfect, but would force her to sign off for him to make any changes or cancel the policy. Should also make her aware of when the policy is in jeopardy of non-payment —she could then pay to keep that from happening & go after him to get reimbursed.

All just random ideas from me, but lawyer or judge would be better place for her to be asking

 

[Deepsea]

Best thing to do is #1 have the EX Husband transfer ownership to the EX wife. Have ex wife make payments

#2 MAKE SURE to change beneficiary relationship to EX WIFE !

 

[Samanler]

I was looking for the same but for Canada. I am going to get a divorce from my husband and I'm examining all possible outcomes out of it! It's not the easiest thing to get a divorce in BC and the lawyers here are quite ruthless. I was lucky enough to get a good and cheap lawyer that was sensitive enough to look in all aspects including the visiting allowance for the father as well as a good compensation for the monthly allocation fees. Now I'm just trying to find out what's going to follow with the life insurance that we both have.

 

[scagnt83]

I was looking for the same but for Canada. I am going to get a divorce with my husband and I'm researching all possible outcomes out of it!

Probably not the best forum for laws in Canada.

But if its like the US, it just depends on the individual situation, along with the judge.

When kids are involved, it is extremely common in the US for a judge to require life insurance to continue, or even be purchased if none exists. That can go both ways though, especially if custody and expenses are split 50/50.

If no kids are involved, it varies a lot more. If alimony is awarded, then often life insurance is required for the time alimony is being paid.

 

[Allen Trent]

If alimony is awarded, then often life insurance is required for the time alimony is being paid

Very true. Oddly, I have found the alimony issue more difficult to properly protect. The hard part is alimony is alot like owing a debt to a bank, etc but bank loans can be easily covered by a collateral assignment that only permits the bank to collect from a death benefit the balance owed on the debt.

Many carriers don't let a collateral assignment be used for alimony court decree,so it is up to the policy owner to update the beneficiary designation annually to Lower the % the ex-spouse would get for alimony pay off.....but that is less than ideal to leave it up to the insured to update.

Have you had experience with carriers having a novel way to cover this declining obligation situation of alimony?

 

[scagnt83]

One solution is to name the wife or lawyer as an alternate contact for a lapse notice to be sent. Many life policies have this option now just like LTCI. That way they can give warning and notify the court of the issue.

 

[Allen Trent]

One solution is to name the wife or lawyer as an alternate contact for a lapse notice to be sent. Many life policies have this option now just like LTCI. That way they can give warning and notify the court of the issue.

That is helpful too so that the ex spouse isn't hurt by a lapse or cancel/ surrender.

But have you come up with any way to make sure an Ex spouse doesn't collect an entire $500k death claim in month 115 of a 120 month alimony agreement where they might only be owed about 25k in remaining balance? 5
The 475k likely should have went to someone else like kids, new family. In a bank collateral, the bank would get 25k & then the carrier would pay the primary bene listed by the client.

 

[scagnt83]

Have you had experience with carriers having a novel way to cover this declining obligation situation of alimony?

Not carriers, no. Ive heard of agents laddering term of different lengths and amounts.

Hypothetically, you could set up a trust to be Owner/Bene and set a schedule of benefits for the spouse that matches the alimony requirement.

 

[Allen Trent]

Not carriers, no. Ive heard of agents laddering term of different lengths and amounts.

Hypothetically, you could set up a trust to be Owner/Bene and set a schedule of benefits for the spouse that matches the alimony requirement.

Yup. That is what has been advised: either manually change bene %s every year or set up trust, but most weren't not interested in the added cost of trust, etc. Laddereing term can make sense if total coverage not needed for others, but pricing at some younger ages & face amounts can make cost a bit inefficient because of added policy fee for each policy

Just seems so simple in my mind to use a collateral assignment, but not allowed so I am sure there is a valid reason by legal departments