When it comes time to draft a property settlement agreement at the end of a divorce, a divorce attorney’s job is to protect the long-term interests of his or her client. Simply splitting up real and personal property is not enough. To ensure that their clients will receive the benefits of a settlement agreement in the future, attorneys can create protection by including provisions for insurance plans in the property settlement agreement. The three main types of insurance to plan for are life insurance, health insurance, and auto insurance.
Life insurance proceeds are a good way to guarantee that child support, alimony and equitable distribution awards will be paid in the event of one spouse’s death. The spouse who is insured by the policy can designate his or her children as beneficiaries and may be able to use the policy as an investment tool. If the life insurance is going to secure payment of a support obligation for a set period of time, it is important that the insured spouse consider changing the beneficiaries of the policy after the period has expired. And in any settlement agreement that includes a provision for life insurance, the provision should require the insured spouse to present proof of the insurance coverage, beneficiaries, and premium payments on a periodic basis.
Another important kind of insurance is health insurance. Many marriages include one spouse who provides health coverage for the other. The spouse without independent coverage has to make sure that methods are in place to transition onto their own plan. The federal COBRA plan or Pennsylvania’s version of COBRA can extend the dependent spouse’s coverage for a period after the divorce. Or, the dependent spouse may want to go on her own insurance immediately. The key is to explore the options early, because once the divorce is finalized, Pennsylvania law forbids the spouse who provided coverage during the marriage to continue doing so.
Finally, spouses should plan for auto insurance. This planning needs to be done early. Once one spouse moves out of the marital residence, the spouses should go on different policies, because a driver’s residence and the location of the car affect the price of insurance, and an accident claim may be denied if physically separated spouses remain on the same policy. The property settlement agreement should also list all of the vehicles owned by the spouses and designate which spouse will be responsible for paying the insurance on each one.
Insurance can be complex, but planning for it in advance ensures that the resolution of a divorce goes smoothly and that clients’ interests remain protected.