Many Florida spouses expect to receive spousal support as part of their divorce. Having this source of additional income can make a huge difference in the financial bottom line for divorced spouses. While alimony is part of many divorce settlements, it is important to understand that this resource only exists during the lifetime of the paying party. Once that former spouse passes away, so do the payments. The best way to ensure continuation of spousal support after the death of an ex is to obtain a life insurance policy.
Life insurance as a topic should be included during the negotiation process. The receiving party can and should insist that a policy is purchased that will provide the same value as the anticipated spousal support payments. The agreement can specify that the paying spouse is responsible for procuring this policy, or the recipient can obtain his or her own insurance coverage for the other party. If the spouse tasked with paying alimony purchases the life insurance policy, it’s important to make sure that the recipient is listed as the technical owner of the policy.
Simply being named as the beneficiary of a life insurance policy does not provide adequate coverage. No matter what is decided during negotiations, or what appears in the final divorce settlement, if the receiving spouse is not the designated owner of the policy, then the other party can make changes down the line. Maintaining “ownership” of a life insurance policy is the only way to guarantee that benefits will be made available when the time comes.
Obtaining life insurance coverage on a spouse who is expected to pay alimony or child support is an important component of a well drafted divorce settlement. This is an issue that many in Florida fail to consider when addressing the topic of spousal support, but it’s a detail or deserves close attention. The sole purpose of spousal support is to provide a base of financial stability for a dependent spouse, and life insurance is an important tool in achieving that goal.
Source: U.S. News & World Report, “Gray Divorce: What Women Who Divorce Later in Life Need to Know“, Debbie Carlson, July 21, 2016