Life Insurance and Child Support
For litigants in divorce and paternity proceedings where child support is a consideration, life insurance should also be an important consideration. In the event a parent who is contributing support passes away before his/her obligations of child support and college contributions conclude, life insurance proceeds can continue to provide for the financial support of the children. Life insurance beneficiary designations, as well as such designations on other assets such as financial instruments and retirement accounts, may need modification to best protect the asset(s) for the benefit of the children. Many parents consider designating their children as beneficiaries instead of their ex-spouse, other parent or relative. Doing so more effectively assures the proceeds are allocated for the intended recipients. If minors are designated as beneficiaries, a custodian will be required to oversee the proceeds until the time the children are emancipated. Such a designation is regularly accomplished through insurance company forms. The custodian receives the proceeds from the life insurance policy upon the death of the insured, but the custodian has a legal duty to use the funds for the only the welfare of the beneficiaries. A trust is another estate planning option. If utilized, the trust can be designated as the beneficiary of the life insurance, and the terms of the trust can provide how the proceeds are to be distributed for the benefit of designated survivors. Consultations with experienced divorce and estate planning attorneys can offer the best direction for each person’s particular circumstances.