ASK ANGIE^TM
By Angela Hallier, Esq.
Answers to your divorce and family law questions

Q How will our life insurance and disability policies be treated in our divorce?

A Determine first whether or not your life insurance policies have a "cash" value (term policies do not, whole life and other types of life insurance typically do). If there is a cash value it must be considered in the overall allocation of assets and debts in your divorce. Typically the policy itself is awarded to the spouse whose life is insured by the policy. However, in certain situations and for certain reasons, one spouse may wish to own a policy that insures the life of their former spouse.

Disability policies are awarded to the insured spouse with no value assigned to the policy. If a spouse received disability income during the marriage, any such monies existing at the divorce filing, or assets purchased with those monies, are subject to division in your divorce. Disability payments received after the divorce is filed belong to the disabled spouse, although the income may be utilized in calculating child support or spousal maintenance.

There are other important uses for these insurance policies in connection with your divorce. You might want to designate the children or one spouse as beneficiary of a life insurance policy for the purpose of providing funds to care for the children or their educations in the event of the death of one parent. You might want to use life or disability insurance to secure spousal maintenance or other financial obligations so that if the owing spouse dies or becomes disabled prior to fulfilling those obligations the other spouse is assured of payment. Not all of these arrangements can be ordered by a judge if your case proceeds to trial. However, they can all be part of a settlement contract between you and your spouse. You will want to make sure that the spouse carrying the insurance provides periodic evidence that the policy remains in force and that no loans have been taken against it.

It is always advisable to seek the counsel of a qualified attorney who can advise you specifically about your case. The information in this column is provided for general information only in the state of Arizona, is not specific to any one case and does not create an attorney-client relationship between the author and the reader. ©2003 - 2008 Hallier Law Firm PLC

ASK ANGIE^TM is published monthly in Arizona Trends Magazine.