Life Insurance and Child Support

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The issue of child support is often a big deal because the welfare of a child must be secured in the unfortunate event that a parent or caregiver passes away. We help with such matters, and this article should guide you on some issues along these lines.

Securing a Child’s Support Through Life Insurance

Because a child’s support from the parent needs to be continuous from the time the parents divorce up to the child’s emancipation at becoming an adult, it is important to know the implications of the parent paying child support dying before the period of paying child support is over.

When two adults divorce, if they don’t already have life insurance but they qualify to get a coverage, it is advisable to do so with the help of a lawyer to draft a good agreement.

There are many issues that need to be addressed in a well-drafted life insurance provision including potential benefits of paying the life insurance policy proceeds into a trust, and what happens if the paying parent changes the designations of the beneficiaries.

Potential Beneficiaries

There are different options of naming beneficiaries for a life support policy including:

• The child themselves; who gets full access to the remaining funds at age 18
• A legal custodian; who gives the balance of the funds to the child at age 21
• The ex-spouse or the child’s other parent

How a Lawyer can Help

As a number of considerations must be made, a lawyer can help by:

• Advising you on how to avoid a ‘windfall’ situation
• Helping you draft an agreement to use life insurance to secure alimony payments
• Making sure that the separation agreement expressly prevents unilateral changes in the designations of beneficiaries and policy amounts to ensure prior obligations don’t get avoided.
• Clarifying who owns the policy; the spouse or a trust.