In child support orders, the payor will often take out a life insurance policy, naming the child(ren) as the beneficiaries. This financially protects the child(ren) if he or she dies before they reach the age of majority. Some states make this mandatory, if the payor is insurable.

The above child-support scenario can also be easily applied to any spousal support order to achieve similar financial protection.

Upon divorce, the property distribution award can often include one spouse getting a portion of another spouse’s retirement account. This does not occur until the plan holder reaches the age of retirement according the plan, so receiving this asset is postponed to the future. As with many plans, the alternate payee will not receive any portion when the plan holder dies. This being said, it can be a significant risk if proper life insurance is not taken out with the alternate payee as the beneficiary.

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Your Suggestion

1. You Should Have a Will
   This is typically not the first thing on anybody’s want list, but yet it always seems to loom in the back of one’s mind. Do yourself a favor, especially if you have children, and draft and execute a will. Many spouses, while married, will have some kind of estate planning involving a will, but let it be known that once divorced, the will in place becomes null and void. Most divorce lawyers provide his or her clients with a "do to list" for once the divorce is finalized and one of the first things on this list is revisiting or creating a new will.
   Contributed on 5/16/2007 by: DivorceDex.com Staff

   Category: Estate Planning  (Applicable in All States)
2. When a Parent Remarries
   Perhaps the newly divorced parent remarries. The parent may unintentionally disinherit a child, as without legal documentation to indicate otherwise, a spouse is generally entitled to one half of the deceased spouse’s estate. The divorced parent may desire to leave assets to care for both the new spouse, and the children. In such a situation it may be very important for the parent to sit down with a financial advisor or their estate planning attorney to assess their options. An easy solution is the use of additional life insurance to assist the parent in their wishes to provide for both the care of minor children and the new spouse. Term insurance can be a low-cost solution to provide these benefits until the children reach adulthood, assuming the parent is insurable.
   Contributed on 11/19/2007 by: Paragon Wealth StrategiesJacksonville, FL[Total Submissions: 14]

   Category: Estate Planning  (Applicable in All States)
3. Don’t Forget to Update Your Beneficiaries!
   It’s happens more than you think.... you get divorced and you forget to change the beneficiary designations on your retirement plan (IRA / 401k) or your life insurance policy. Years later when you pass away, your ex-spouse could get all the benefits... even if you had remarried; even if you wanted the children to get it. Keep in mind, your divorce decree may state that the beneficiary will be changed, but you still need to contact the financial institution and follow their rules to change the beneficiary. This will prevent any problems down the road. Also, don’t be too quick to make the changes when you are just separated... you may have to wait until the divorce is final.
   Contributed on 1/6/2010 by: Brian B. Rockwell, CFP®, CDFA™, ChFC®New Port Richey / Trinity, FL[Total Submissions: 5]

   Category: Financial Planning  (Applicable in All States)

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