On behalf of Lake Toback Attorneys
Illinois residents may be wondering how life insurance policies are divided among spouses in a divorce. In a divorce, spouses must divide all the property accordingly, including any cash, annuities, bank accounts, insurance policies and so on. However, life insurance policies generally have no cash value if both the owner of the policy and the beneficiary are still living.
Typically, the owner of a life insurance policy, the one who pays the premiums on the policy, retains the rights to the policy in a divorce. The intent of the policy can affect how it is divided as well. For instance, if the life insurance policy was intended to help the other spouse care for their children in the event of the policy holder’s death, then the policy owner might transfer ownership to the other spouse. However, if the intent of the policy was to pay off a mortgage, then the need for the policy probably won’t exist after the divorce.
When couples get a divorce, there are various factors they must consider in addition to property division. Child custody, child support and alimony are all other issues that must be discussed during divorce proceedings. Any debts that the couple has should be addressed as well. Experts say that it is best for couples to try to pay off any debts during their divorce settlement if at all possible to prevent creditors from attempting to collect the debt from both spouses later, even if one spouse has been decreed not responsible for the debt by divorce court.
Divorce attorneys may be able to assist people entering into a divorce with negotiations when it comes to division of property and other matters. They may also help them understand every aspect of a divorce settlement before agreeing to it.
Source: Fox Business, “Don’t I Get Half of My Ex’s Life Insurance Policy?“, Jack Hungelmann, May 06, 2013
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Splitting life insurance policies in a divorce