Divorce and Life Insurance in New Jersey

When many people think of divorce settlements, they are mainly thinking of “who gets the house” and “who gets the kids.” Divorce settlements, however, involve a whole host of financial decisions and asset apportionment considerations, including personal property, real property such as houses, intangibles such as stock and business ownership, and financial decisions incident to marriage such as health and life insurance coverage. Can a party change the beneficiary of a life insurance policy after filing for divorce? Should one party be required to maintain a policy for the benefit of the other, or their shared children, after the divorce? Read on for a discussion of how New Jersey divorce law affects life insurance policies, and contact a knowledgeable New Jersey family law attorney with additional questions.

New Jersey often requires a life insurance policy to be kept after divorce

If a divorce settlement or order involves alimony and child support, then the order will also likely require the paying party to maintain a life insurance policy to ensure that the payments continue even if the paying party passes away. The policy must be sufficient to fund the alimony and child support payments for some time in the event of the payer’s premature death.

The idea behind the rule is that the children and former spouse of the supporting party rely on the payments for financial support, and they are not expecting the supporting party to stop working or cease payments any time soon. If the supporting party suddenly passes away, their alimony and support obligations would end with them, leaving the recipient and the children without financial support. Keeping a life insurance policy in force avoids undue financial hardship for the parties being supported.

As a result of this public policy interest, courts may take a number of steps. For instance, the court may order the supporting party to keep a life insurance policy to back up child support and alimony obligations. Moreover, the court may order that the policy name the supported spouse or the other parent as the owner of the policy, if permitted by the insurance company. If a supporting party fails to keep up the payments for a life insurance policy, a New Jersey court has the power to issue financial sanctions until the defaulting party complies with their obligation.

If you are working through a New Jersey divorce, it is important to include provisions related to any life insurance obligation. Failing to do so can leave the supported parties in a vulnerable position or lead to undue conflict in court down the line. Moreover, if you are going through a divorce, consult with an attorney before you try to alter the beneficiary of your existing life insurance policies. You may be obliged under New Jersey law to keep the policy as it is unless you secure an explicit agreement from your spouse or an order from the court permitting the modification. As we previously discussed, New Jersey courts have required a party to maintain a life insurance policy even after the explicit requirement in the original divorce order expired.

If you’re facing divorce in New Jersey and want experienced legal help creating a reliable marital settlement agreement, or if you are unsure of your legal obligations following a divorce, contact the dedicated and knowledgeable Union family law attorney John B. D’Alessandro at 908-964-0102.