When couples divide property in the process of negotiating a divorce settlement, they may find that one or the other has a life insurance policy with no cash value. In cases in which the family law judge has ordered the couple to divide everything equally, it is often difficult to determine the true value of a life insurance policy.
In most cases, the owner of the policy is the person who pays the premiums. That person can designate any beneficiary he or she chooses. For example, if a husband has a policy on his own life and pays the premiums, he may designate one of his children or a subsequent spouse as the beneficiary, leaving the former wife with no proceeds from the policy.
In these cases, it is sometimes best for the partner who needs the life insurance proceeds to take over payments on the policy and name himself or herself as the beneficiary. If the owner agrees, this is an easy transfer in most cases. In other cases, such as when a former spouse is responsible for child support, the custodial parent may wish to have a life insurance policy on the paying spouse in case of his or her sudden death.
A family law attorney may be able to assist partners in making life insurance and other financial decisions pursuant to a divorce action. An individual facing divorce must make many decisions and some of them are about division of property. Obtaining a fair and equitable distribution of property is the most important goal for any couple who want to retain their financial independence and exit the divorce in the best possible financial position.
Source: Fox Business, “Don“, Jack Hungelmann, May 06, 2013
