Tip #4: Make Sure To GetSecurity For Support Awards

Security For Payments and Obligations Is Essential

Think about it! What if a court order requires the father to pay alimony and child support, and then to provide a four year education for each child. He remarries. When the children are 13 and 15, he dies unexpectedly. His will leaves everything to his new wife. His new wife is also the beneficiary of his insurance. Without more, no more alimony and support. Social Security for the children ends when each reaches age 18. Without more, no college education.

That’s why it’s important to plan for ways to protect support and alimony awards so if the supporting spouse dies or becomes disabled, benefits can continue.

Think about using disability and life insurance. Or an annuity. Or a contract to make a will. Make sure that any obligation is funded with life insurance and disability insurance because Social Security for children whose parents die terminates at age 18...well before college. Consider, and try to agree who will pay for this protection.

Find out if the obligated spouse can be required to get life insurance or long term disability coverage in case of death or an unexpected inability to work. Then check into cost and who will be required to pay. If you are the receiving spouse, it may be a wise decision for you to agree to pay the premiums for policies to protect what you receive. Or ask your parents to help you.

Find out if an existing disability or life policy can be used or whether a new policy is needed. This question is often answered based upon the cost of the policy and the amounts of benefit available. Check into anticipated coverages and cost. BUT REMEMBER: Governmental and some employee policies should be avoided because of complex rules about beneficiary designations.

If someone other than you is making the premium payment, always make sure that you get regular proof of premium payment and beneficiary designation. If possible, it's always best that you own the policy and pay the premium...because then you don't have to worry about non performance or going back to court to get information.

Find out who will own the cash values of existing policies and how can they be used. If you are going to make the premium payments on an existing policy that builds cash value, you need to make sure that the cash is not taken out of the policy.

There may be tax consequences in connection with the transfer of ownership of policies and collection of insurance proceeds. Find out what they are and plan for them now.

If one spouse is uninsurable, check into alternatives which may be available. Make sure that existing policies are continued for everyone's protection.

Always check into the beneficiaries of all policies to make sure that the appropriate persons are designated. Remember: Only the owner of a policy can change the beneficiary.

Beneficiary designations must be considered closely. Remember that governmental insurance programs preempt state court orders. This means that if the court order requires a beneficiary designation on a federal insurance program, and it is not accomplished, there is nothing you can do. So consider using separate policies and make sure you get proof of premium payment and beneficiary regularly.

Ask about a contract to make a will. Find out what it is and how to enforce it.

Whatever it turns out to be, make sure it is clearly spelled out in your settlement.