During high-asset divorce cases in Virginia, people will often think about how property will be assessed and divided and what the spousal maintenance determination will be. These factors are undoubtedly important. However, there are lesser-known aspects of a divorce case that people need to think about.
A life insurance policy can be of immense value and critical to a person’s future. It is not uncommon for people who are getting divorced to remove the spouse as a beneficiary on the policy. However, state law can intervene and order that the policy be maintained. From the perspective of the higher-earning spouse and the person of lesser means, understanding this is imperative.
What can the court do regarding a life insurance policy?
If the life insurance policy was created and maintained during the marriage, the court can order it to stay in effect even after the divorce. It can be a purchased policy, one issued through an employer or one that is controlled by the insured person.
The person must be allowed to designate a beneficiary and has done so during the marriage. The court can also designate the other person as the beneficiary of a death benefit if there has been an order to pay spousal support. The cost can be allocated between the parties. If spousal support ends, the order can also cease.
The court will weigh various factors when deciding whether to order the life insurance policy to be maintained. These include: the health, age and insurability of the insured and the health and age of the beneficiary; the cost; how much spousal support or maintenance is being paid and its duration; insurance rates when the order is made; if either side can maintain the cost; and other factors the court thinks are important.
Either side can make a motion for the order to be changed if circumstances warrant it. That can be key if there are financial concerns that need to be addressed by court order. With the financial upheaval currently happening across the nation and around the world, those who have significant assets could face a drastic reduction or increase in their net worth. This could be a challenge that the order will address.
All aspects of a high-asset divorce can be complicated and help can be essential
High-asset divorce can be laden with conflict and obstacles to reach an acceptable solution. People may think the problems are related to hidden assets, property, dividing a business and determining who should retain what from the marriage. It can also extend to life insurance. For these cases, it is vital to have experienced advice from the start to be fully prepared and forge a positive result.