Divorced with Kids: Do I Need Life Insurance?
By: M. Scott Gordon
If you are getting divorced and have minor children from the marriage or relationship, will you or your soon-to-be-ex be required to obtain life insurance? Can a court require one or both parents to obtain life insurance as a way of providing child support in the event of death? Courts usually require parents to obtain life insurance precisely for this reason.
Requirements to Obtain Life Insurance to Support Minor Children
If you do not already have a life insurance policy, the court may order one or both parents to obtain a life insurance policy in order to provide for the minor child. It is important to know that Illinois child support law changed recently, and Illinois now operates on the “income shares” model. This means that both parents have an obligation to support their children financially, and the percentage of each parent’s obligation will be based on a number of different factors.
When Illinois used to name only one parent as the payor of child support (typically the “noncustodial parent”), that payor parent could be required to name the other parent as the beneficiary of a life insurance policy. Now that Illinois has moved entirely away from naming custodial and noncustodial parents—and has moved to the incomes shares model of child support—the court may require one or both parents to obtain life insurance. Who should be named the beneficiary of the life insurance?
Your Life Insurance Policy and Your Beneficiaries After Divorce
For parents who already have a life insurance policy or who newly purchase a life insurance policy according to the requirements of the court, who should be listed as beneficiaries? When you are married and have a life insurance policy, you will typically list your spouse as a beneficiary, recognizing that your spouse will use the life insurance payout to provide for the family, including your minor children. But determining beneficiaries can be more complicated after you get divorced and have minor children. You want your life insurance policy to provide support for your minor children, but can you list them as beneficiaries?
In general, a minor child can be named as a beneficiary on a life insurance policy, but the insurance company typically will not pay out to a minor. Instead, you will need to create a trust prior to death, and name a trustee. Since the surviving parent will presumably raise the children, that survivor is often named as trustee. What if you do not like the idea of your ex being named trustee? You can ask the Court if you can name another trustworthy adult as the beneficiary, such as the parent’s sibling (the child’s aunt or uncle) or the parent’s own parent (the child’s grandparent).
Contact a Chicago Divorce Lawyer
Divorce in Illinois can be extremely complicated, particularly when there are minor children from the marriage. If you have questions or concerns about your obligations as a parent after divorce, you should speak with a Chicago divorce attorney as soon as possible. Contact M. Scott Gordon & Associates to learn more about the services we provide to parents and families in the Chicago area.