Unfortunately, many going through a divorce are so focused on the emotional impact the process can have that they fail to consider the legal implications of filing. One area that many are unfamiliar with is how a divorce will affect any life insurance policies in place. Due to the complex nature of life insurance and divorce, it’s in your best interest to connect with experienced Somerset County property distribution attorneys who can help you navigate these difficult legal aspects of divorce.
How Is Life Insurance Divided in a Divorce?
In New Jersey, it’s important to understand that life insurance policies are considered marital property. However, this generally only applies to whole policies, as term policies are not typically considered an asset. This means that during your divorce, you may need to split the value of the policy with your spouse. However, New Jersey is an equitable distribution state, meaning property is not automatically split evenly between a divorcing couple but is instead based on each spouse’s contributions to the marriage.
Depending on the policy you have, the division of this property can vary. Regardless, there are many factors the courts will consider when dividing a life insurance policy, such as payouts and premiums. This is necessary to ensure this asset is divided fairly.
Do I Need to Update My Beneficiaries?
Generally, the courts will require the policyholder to maintain the insurance policy to benefit their spouse and children. As such, the policy must be able to cover alimony and child support. This is to protect the children and ex-spouse in the event the policyholder passes away, to prevent undue hardship. Without a life insurance policy, your ex-spouse can sue your estate for the alimony or child support payments they were awarded in the divorce should you pass away. This can be an incredibly complicated process, which is why the courts often require the policyholder to maintain the policy.
Regardless, you may wonder whether or not updating the beneficiaries on your policy is in your best interest. Generally, you’ll find that the court will most likely order you to maintain your policy as is. However, they may also require you to change it, depending on your circumstances.
As such, if you are divorced and your life insurance policy is not included in your divorce agreement, you are eligible to update the policy according to your wishes if you so choose.
Getting a divorce can be complicated enough without having to navigate what happens to your life insurance policy. As such, it’s in your best interest to reach out to the team at the Siragusa Law Firm for additional guidance during these matters. We understand how overwhelming these matters can be when you’re unsure how to navigate them. That’s why we will fight to help you receive the best possible outcome during your divorce. Contact us today to learn how we can assist you in these times.
