Beyond the emotional toll that divorce takes on everyone involved, there are also pragmatic issues that need attention in order to ensure financial security once the divorce is final. Not only will all parties have to settle property division, custodial arrangements and child support issues, divorce will also have an impact on insurance policies and coverages as well.
As part of the negotiations during divorce proceedings, it is important to remember to discuss health care, car and property insurances as well as beneficiary designations so that these issues won’t come up again later one.
Division of marital property
Property division in Florida is determined by the doctrine of equitable distribution, meaning that the court decides what is a fair, but not necessarily equal, distribution of marital property based on many factors such as the relative financial security of each spouse, the length of the marriage as well as custody, child support or alimony decisions.
As part of the inventorying of property, insurance policies are considered to be marital assets. The court will look at whose name the policies are under and who are the designated beneficiaries as part of property division. During the settlement negotiations, both parties will have to discuss who will be responsible for continuing property, car and health premiums.
Maintaining existing policies
It is possible to maintain coverages of existing policies under some federal laws regulating health insurance. Couples who have long-term policies or policies that are part of a retirement portfolio will most likely need to discuss how these assets will be divided, as well as whether they should continue.
Some insurances, such as life or disability policies, have accrued cash value. If one spouse pays the cash surrender value of a policy as part of property division, the coverage will probably be terminated. Because life insurance becomes more costly as policyholders age, however, it may be prohibitive for an older spouse to purchase a new policy. Alternatives to buying a new policy can include lowering the coverages or requiring a cash value payment by one spouse in the settlement.
When preparing for divorce, it makes sense for both spouses to purchase additional coverage, add policies or update and transfer beneficiary designations or ownership. Without updated designations, if the insured dies it can trigger an interpleader lawsuit, in which the court will intervene to decide on the beneficiary award.
Compassionate and experienced legal counsel is available to Coral Springs residents to discuss options that will provide a measure of financial security after divorce.