Divorce requires California couples to agree on key financial issues like alimony and child support. However, detailed financial arrangements can turn upside down if the paying spouse dies before fully satisfying his or her obligations.
We have helped people plan for the financial consequences of divorce.
Life insurance may help guarantee financial obligations
The National Law Review explains how life insurance may back up a person’s financial commitment to pay spousal or child support.
When you and your ex-partner calculate alimony, you make assumptions about how long payment obligations will last based on factors like your anticipated lifespans and retirement expectations. Setting aside possible career changes or remarriage, you can likely make a reasonable estimate of total alimony payable over time. Based on this calculation, you and your ex-spouse may agree on a life insurance value sufficient to cover alimony. A spouse’s obligation to pay alimony decreases as time goes on, so you should consider future reductions in the amount of life insurance coverage.
As you estimate child support, you should take into account the expense of raising and educating your children until they reach financial independence. College expenses include more than tuition and room and board. Even college students continue to incur transportation, clothing and health care costs. Life insurance must cover all of these expenses.
Premiums and insurability may change over time
Life insurance premiums may change over the term of the policy. Both aging and health problems may cause costs to rise. To guard against excessive premiums, couples may agree to cap the amount the insured party must pay. Couples may also need to plan for circumstances where the covered spouse may become uninsurable.
As you negotiate your financial settlement, you may find that collaborative divorce offers a valuable path for reaching agreement. You may consult our website for additional information about the benefits of collaborative divorce.