- When a couple divorces, the court divides their assets according to the needs, contributions and circumstances of both spouses. A divorce settlement may favor the spouse who has primary custody of the children, ongoing financial needs or less earning potential.
- Divorce settlements often require one spouse to make ongoing payments to the other, such as child support or alimony/spousal support. Depending on the circumstances, a spouse may have to make these payments indefinitely or for a fixed amount of time.
- Because courts order spousal or child support to meet a financial need, it is imperative that support continues even if the "paying" spouse dies. Life insurance is one, relatively low-cost way of making sure that financial support continues even after death.
- Ask your lawyer to include compliance provisions in your divorce settlement. Your husband should be required to pay all premiums due on the policy, and you should have the right to check the policy annually to ensure that it is still in effect. If your husband lets the policy lapse, or refuses to show you proof of compliance, you can take him back to court and ask the judge to enforce the decree.
- If your spouse pays you alimony and holds a life insurance policy on which you are a beneficiary, he can write off as tax deductions both the support payments and the insurance premiums. In turn, you must pay taxes on both the payments and the premiums. Child support payments are not tax deductible and are not counted as income for the custodial parent.
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