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What Role Does A Life Insurance Policy Play in an Orlando, Florida Area Divorce?

How does life insurance come into play in an Orlando, Florida Area Divorce? Life insurance can come into play in many ways in an Orlando, Florida area divorce. 

First, if a life insurance has a cash surrender value, then it is distributed in equitable distribution. That means the cash surrender value is an asset that must be equitably divided during the dissolution of marriage proceedings. 

Life insurance can also be used to make sure that if a parent who must pay child support dies that the children will be taken care of should the parent paying child support were to suddenly die. Usually, the life insurance is put in the other parent’s name as irrevocable trustees for the children. 

Life insurance can also be used to cover an award of alimony. The spouse that is ordered to pay alimony can also be ordered to obtain or keep a life insurance policy to cover alimony if the payor spouse should suddenly die. For the court to order the payor spouse to carry life insurance, the court must make specific evidentiary findings regarding:

1. Life insurance availability.
2. The cost of the life insurance.
3. The obligor’s ability to pay for life insurance.
4. And in special circumstances that warrant the requirement for security of the obligations.

Simply, the court must examine if life insurance is available considering the age and health of the payor spouse; and that such insurance is not cost prohibitive. 

In order to make sure that the payor parent or spouse maintains the life insurance that the payee spouse or child is entitled to receive, a clause should be included in a marital settlement agreement, mediation agreement and final judgment that states the following:

Parties agree that Payor Spouse will continue to maintain said life policy or obtain a life insurance in the amount of whatever is needed ( THE ACTUAL AMOUNT NEEDED GOES HERE) to cover the alimony obligation. Payor spouse will resdesignate Payee as irrevocable sole beneficiary of the life insurance policy to cover the alimony obligation for as long as Payor Spouse is obligated to pay alimony. Parties agree that Payee Spouse may contact the life insurance company directly each year to confirm and verify continuing coverage. Both parties are obligated and required to obtain from the insurance company the form required in order to accomplish the above mentioned in this paragraph and to redesignate Payee Spouse as beneficiary of the life insurance policy after the entry of the final judgment of dissolution of marriage. 

It is crucial that the Payee spouse is designated or redeignated on the life insurance policy after the final judgment of dissolution is married because the divorce automatically cuts a spouse off the insurance. That is why the designation or redesigantion of the life insurance is crucial; and must be done after the final judgment of dissolution of marriage is entered.   

 If you have more questions regarding a Marital and Family Law matter, you may call Ann Marie Giordano Gilden at Ann Marie Giordano Gilden, P.A. at 407-732-7620 and set an initial consultation. You may also visit my website at: https//:www.AnnMarieGildenLaw.com

This article is for informational purposes only; and it does not form an attorney client privilege.