There are many considerations you must make when going through a divorce, such as who will keep the house, how you will handle child support payments, and whether or not alimony is best for your needs. However, many couples fail to realize how essential handling life insurance policies will be during the dissolution of their marriage. Unfortunately, this can be tricky to navigate, so ensuring you have a Los Angeles division of assets attorney to help you navigate this process is essential. Keep reading to learn more about how life insurance is handled during a divorce.
Is Life Insurance Considered Marital Property in Riverside County, CA?
Life insurance is a policy purchased by an individual that ensures their loved ones will receive benefits upon their death. Often, couples will create a joint plan to ensure their children are financially supported in the event they pass away. However, some couples will only take out a policy in the name of one spouse.
In California, most all assets acquired during marriage are considered marital property. As such, according to community property laws, each spouse is entitled to half during the divorce. This means any life insurance policy purchased during your marriage, regardless of who the holder is, will be considered a marital asset, especially if it has a cash value. If you take out a two-million-dollar policy and name your spouse as the sole beneficiary before divorcing, each spouse is entitled to half of that money.
What Should I Do With My Plan When We Divorce?
After you divorce, you should consider updating your policy, if it is in your name. One of the most important steps is to change the beneficiaries, as you likely have named your spouse as the sole inheritor. Instead, you may want to designate your children as beneficiaries. However, this can be challenging if they are minors, so you will likely need to establish a trust to handle the distribution of these funds.
In some instances, the court will order the wealthier spouse to maintain a life insurance policy with their ex-wife and children as beneficiaries, especially if their spouse or children have health issues or need extra support. Generally, this is something many spouses recognize and choose to do, even if the court does not mandate the plan. It is important to note that it is in your best interest to work with your ex-spouse and their attorney when setting up a court-ordered policy in which they are a beneficiary.
When you and your spouse are going through a divorce, you should not try to navigate the complexities of dividing an insurance plan on your own. Instead, you’ll want to ensure you have an experienced attorney from the Zitser Family Law Group to help. Our dedicated legal team will work with you to help you navigate this complex process. Contact us today to get started.