• Stephen Williams

Alimony in Divorce - How Life Insurance Can, and CAN'T, Fit into a Divorce Agreement or Judgment...

Updated: Oct 7


Worried your soon-to-be ex-partner will walk out of your marriage with everything you’ve worked so hard to build for yourself and your family? A new or existing life insurance policy can be a useful instrument in your financial toolbox and help to minimize short term exposure following the divorce, but there are certain ways you can use a Life Insurance Policy as or relating to alimony in divorce legally, and certain ways you can’t…

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A recent case written by Presiding Judge William Thompson of the Alabama Court of Civil Appeals, Turney v. Turney, No. 2201007, 2022 WL 3569240, at *1 (Ala. Civ. App. Aug. 19, 2022), holds that a life insurance policy “cannot be order[ed]...to secure periodic alimony.” Id. at *14. (Note, theoretically, each opinion of each Civil Appeals judge carries the same weight, but the presiding judge assigns who writes the opinions. So, one can presume that the Presiding Judge ‘picks’ their cases and that those cases are of special interest to the Presiding Judge or the Court, or both, whether presently or in consideration of future cases. Id est, when the Court of Civil Appeals wants to paint a bright line with broad strokes, it is often the Presiding Judge who will do it.)

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Back to life insurance issue, the Court of Civil Appeals does explicitly authorize “a trial court…to award life insurance as a separate award for the benefit of the [beneficiary spouse].” Id. at *14.

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So here’s what you and your divorce lawyer need to know. The trial court CAN order a party to procure and fund a life insurance policy as a stand-alone portion of a divorce judgment, but the trial court CAN’T order a life insurance policy for the purpose of securing periodic alimony, which inherently terminates at the Payor’s death.

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Logically, this makes sense. Thinking in terms of first principles, any party is unjustly enriched when they receive the benefit of something that does not exist or without any consideration, (or contribution on their part), whatsoever. The trial court can’t obligate a party to provide a future benefit which survives the Payor’s actual legal obligation.

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Practically speaking, however, good preparation and the understanding of this concept by the Judges and Divorce attorneys will relegate this to a distinction without a difference. Whatever their intention, trial courts will simply order a life insurance policy to benefit the Payee spouse without any editorial qualification.

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The only remaining consideration, then, is the amount of the policy and the monthly costs of the premium and how that fits into the trial court’s calculation of an equitable distribution of the marital estate or compares to the separate and distinct award of periodic or rehabilitative alimony.

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Another thing to consider, though, and this can provide some wiggle room if the anticipated proceeds of such a life insurance policy justify the effort and expense, are the payment terms, especially if there are Children involved who may incur future costs like vehicles or college tuition, and the Payor spouse wants to make sure certain funds are set aside for the Children and, logistically, determine how that is to be done, e.g., a trust or conservatorship by a third party or even a relative of the Payor spouse as long as certain controls are in place.

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If you would like to learn more about how you, as a Committed Parent or Caring Relative, can stand up for yourself and be more effective in your Child Custody, Divorce or Adoption case, please click the “book appointment online” on the menu or top right of your screen to schedule your initial consultation at one of our offices.

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This article contains general information and should not be construed as legal advice for you and or your unique situation. ~SW, Foxtrot