Alimony and Child Support in a Divorce
One of the issues that often gets overlooked during your divorce is securing your divorce settlement payments, like alimony and child support, should something happen to your ex-husband. The death of an ex-spouse, and subsequent loss of that income, could be financially devastating.
The Divorce Financial Strategists™ here at Bedrock Divorce Advisors™ bring up this issue with all of our clients because we’ve seen what losing this income can do to families. Our recommendation is that a life insurance policy be set up in such a way that you will receive a tax-free, lump-sum payment of what you would have received over time from your alimony, child support and/or other divorce-related payments.
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It is important to set up this life insurance policy before your divorce has been finalized. This is because your husband could refuse to cooperate after the divorce in getting the required medical exam. Or, you may find that he is uninsurable. Either way, you need to know this before the divorce is finalized so that, if necessary, you can find alternate ways of securing your divorce settlement payments.
It is also critically important that you become the owner or irrevocable beneficiary of the policy. If you are not, your ex-spouse could stop making payments and you would never know about it until it was too late. However, if you are the owner or irrevocable beneficiary of the policy, you would be notified of non-payment of the premium and could take action before the policy lapsed.
Using life insurance to ensure divorce settlement payments can be very complex. The laws and regulations differ from state to state. Therefore, it is very important that you consult with someone who is knowledgeable and experienced in using life insurance and other methods to secure divorce settlement payments.
You might also consider setting up a disability insurance policy. Statistically there is a higher chance that your ex-husband would become disabled rather than actually passing away. If something happens to him and he is no longer able to work, he might seek a reduction in his alimony and child support payments. Unfortunately, unlike life insurance, the ex-wife cannot own a policy on her former husband. So you would need to put a mechanism in place to make sure that the disability policy payments are made.
If you have any questions about how to secure your alimony, child support and other divorce settlement payments, please contact one of our Divorce Financial Strategists™ here at Bedrock Divorce Advisors and we’ll make sure that you take the right steps.
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC, a firm which advises women throughout the United States before, during and after divorce on dividing marital assets and negotiating favorable settlements. He writes for Forbes.com, the Huffington Post and other publications. For further information go to http://www.BedrockDivorce.com or email Jeff at Landers@BedrockDivorce.com.