The Law of Division: Planning after Divorce — Insurance

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Roxanne Alexander, CAIA, CFP®, AIF®, ADPA® Financial Advisor

Insurance Policies

Often, property and casualty policies may be issued in the name of one spouse. This is usually the case with homeowners insurance. If you receive property from a divorce, you should make sure the policy has your name on it in the event of a claim. It would also be prudent to relist personal property after the split as you may be paying a higher premium when you now only need half the coverage. For example, if you move from a four-bedroom house with $60,000 content coverage to a two-bedroom, you may only need $30,000 worth of coverage. You could also be paying extra for valuables such as jewelry and art belonging to your former spouse so it is important to re-evaluate your policy.

Your car insurance may also increase, due to marriage discounts insurance companies provide. You will also have to remove any stacked coverage if you no longer have two or more cars in the household. If your address changes or the garaging for the car changes, this will also affect your premiums. If your car moves from a secure garage to an outdoor parking spot, this could also cause your premium to increase, depending on the carrier.

You may have various life insurance policies, maybe some with your employer. Check the beneficiaries to make sure they are in line with your desires. If you want minor children as beneficiaries, you may need to set up trusts. You should also revisit your estate planning with your attorney to make sure your trusts do not list your former spouse as trustee (unless that is your desire).

It may also make sense to get term insurance coverage on the spouse who pays child support until the children are old enough to support themselves. The spouse who receives the child support should be the beneficiary of this policy.

If health insurance is provided by the employer of one of the spouses, how will the other spouse get coverage after the divorce? Are the dependents covered under that policy?

This can be a financial hardship if the other spouse has to find individual coverage on his or her own.

Credit Reports

If your spouse has been dealing with the finances and most of the bills and credit are in his or her name, you will need to establish your own credit. You want to make sure your name is not on anything belonging to your former spouse just in case a payment is missed and your credit is affected negatively.

Feel free to contact Roxanne Alexander with any questions by phone 305.448.8882 ext. 236 or email: RAlexander@ek-ff.com 

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