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Planning for Divorce - Life Insurance

Of course, deciding with your spouse how to tell your children that you are getting divorce is a crucial step in planning for divorce. There are other steps that may be taken before a divorce filing depending upon your circumstances.

Once the initiating party signs a divorce complaint, and when the second party is served, Automatic Court Orders attach. That means that even though neither party has stepped into a court house, court orders are in place regarding certain matters. Most of these orders are to protect the status quo (such as orders to prohibit the sale, giving away or concealing of assets and orders to prohibit any unreasonable incurring of debt) and access to children and the marital home until a Court can address the issues at a scheduled hearing. One of these orders states "Neither party shall change the beneficiaries of any existing life insurance policies..."

In many cases, even though the wife and husband no longer wish to be married to each other, each believes that if he or she were to die, the other would use the insurance proceeds appropriately for the children of the marriage.

But what if that is not the case? If one believes that the spouse would not or could not care for the funds and use them appropriately, it is best to change beneficiaries before filing the complaint. This is especially true if the spouse has little financial acumen and the amount of the life insurance is significant. A trust can be established for the proceeds, or a trusted family member may be chosen. If you have children from a prior marriage, or some other special person. one can even decide to name several beneficiaries with each receiving a specified percentage. This planning for divorce should be discussed with Steven Hirsch once he begins representing you.   

I recently finished a contested trial, representing the husband. The wife and the husband's mother were like oil and water; the wife had obtained a restraining order against the mother. After the contested trial and the Judge's decision, but before the final judgment of divorce was entered, the husband died in his favorite chair in front of his television.  A death ends the divorce process.

The husband's mother made all funeral arrangements and was financially responsible for the cost. Had the husband not changed the beneficiaries of his life insurance before filing the divorce, his mother would have incurred a large funeral bill while the wife received all of the insurance proceeds.  Also, his daughter from a prior marriage would have been left without anything.  

Before filing for a divorce, review your current life insurance coverage with your attorney and the beneficiary designations. Discuss that with your attorney or estate planning attorney. 

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