Life Insurance Policies

In cases where a party is awarded spousal support, the recipient will want to obtain some sort of guarantee in the event the payor suddenly dies. It is for this reason that courts have the ability to compel a spousal support payor to alter his/her life insurance policies and name the recipient as a beneficiary to the life insurance policy.

As was witnessed in Scheelar v. Scheelar, this can pose a significant problem if the payor dies without complying with the clause in the separation agreement that compels him/her to name the recipient as beneficiary to the policy. In such cases, if the parties included in the agreement a standard clause such as the following, “in the event that the husband should die without such life insurance being in effect, notwithstanding that he remain subject to the obligation to pay child and/or spousal support, the wife shall be entitled to a first claim upon the estate of the husband for the sum of $500,000,” then the payor must have assets for the recipient to collect on his/her spousal support entitlement.

In cases where the payor did not have sufficient assets, courts such as the one in Scheelar, refused to order that the life insurance policies be paid to the recipient nonetheless.

It, therefore, would be wise to make the payor and recipient joint owners of the policy. That way, if the payor decided to amend the designation of the beneficiary of the policy, the joint owner would be notified.

To learn more about life insurance policies as well as the services provided by Krol & Krol, call 905.707.3370 today.