Insuring Your Support Obligations

Oftentimes in divorce matters, one party has an obligation to provide support to the other party, in the form of alimony. Similarly, if your divorce matter involves minor children, both parents have an obligation to provide support for those children. If your case involves such an obligation, it is more than likely that you or your spouse will be called upon to secure the support obligation in case the supporting spouse predeceases the party or children being supported. 

The most common way to secure alimony or child support obligations is through life insurance. There are several considerations in obtaining and maintaining such life insurance policies to insure a support obligation. For instance, you and your spouse will need to determine what amount of insurance is appropriate to secure the obligations; it must be sufficient to pay out the expected support.  Also, the duration of the insurance policy should be considered, to make sure that the policy does not expire prior to the end of the support obligation. 

Other considerations may include a declining obligation. For instance, if you are insuring a 20-year support obligation, the amount necessary to insure the support obligation in Year 1 is going to be far greater then in Year 20. Sometimes it is appropriate to consider reducing the amount payable to the beneficiary as the years go on, to avoid a potential windfall to the beneficiary in later years. This has the benefit of reducing the cost of maintaining the policy to the supporting spouse.

There are other creative options available to secure a support obligation which may be appropriate given the specific circumstances of your case. For example, life insurance may be cost-prohibitive if a party has some pre-existing condition, making it difficult to obtain insurance. If this is the case, there may be other appropriate ways in which to secure a support obligation. For instance, an asset account with a beneficiary designation can be useful. Or the supporting spouse can make appropriate provisions in their estate planning documents.

The lawyers at Cohn Lifland Pearlman Hermann and Knopf LLP, understand the importance of insuring support obligations and can help determine how best to safeguard you and your rights. If you have any questions, contact one of our experienced family law attorneys at Cohn Lifland Pearlman Hermann and Knopf LLP.