If she packs her bag and walks out, it's not a legal separation. If he pawns the wedding ring and moves back with mom, it's also not a legal separation. To constitute a legal separation, a court's separation order must be in place. This means that a judge issued an order dividing up the couple's property, debts and kids, just like in a divorce. Usually term life insurance is among the assets addressed in the separation order.
Divorce by Any Other Name
Legal separation is a type of dissolution for those who cannot, or choose not to, divorce whether for religious, health insurance or other reasons. A legal separation typically looks like divorce, smells like divorce and tastes like divorce. All assets and debts are divided between the two spouses just as if they were divorcing, while support issues are also hashed out and ruled on, and the court determines child custody and visitation issues as well.
Term Life Insurance
Term life insurance provides coverage for a fixed number of years. It's often the most affordable type of life insurance because the term may end without any payout being made. Like most other life insurance policies, the person buying this type of policy names a beneficiary to whom the proceeds pass if the insured dies during the life of the policy. This beneficiary designation takes precedence over any disposition of the policy proceeds in the insured's will.
If a couple purchased the term life insurance policy during the marriage, it is community or marital property and likely mentioned by the court in the separation agreement. Even though there is no "cash-in" value for term life insurance, the court often rules in its separation order that the non-custodial spouse must keep the policy in place with the other spouse named as the irrevocable beneficiary. This provides family support if the insured dies. In this case, the separated spouse has a claim to the insurance proceeds.
It is possible that a term life insurance policy, in effect during the marriage, might be determined by the judge to be the separate property of the insured. For example, it may be classified as separate property if the spouse purchased it before marriage and paid for it with separate funds. In that case, the insured spouse can name whomever he likes as beneficiary of the policy. If he names a third party as beneficiary, the separated spouse would not have any claim to the policy if the insured dies.
Neglects to Change the Beneficiary
If a term life insurance policy is awarded to the insured as his separate property, he has the right to name a beneficiary. In most states, if he named his spouse as beneficiary before their legal separation and does not change the designation after the separation, she takes the proceeds if her husband dies after separation while the policy is still in force. A few states, like Virginia and Florida, have laws annulling beneficiary designations after a divorce, but as of 2015, few, if any, of these laws mention legal separation.
- American Bar Association: Life Insurance and Divorce
- Law Offices of Lawrence Pascoe: The Life Insurance Clause in Separation Agreements
- Met Life: Term Life Insurance
- California Courts: Divorce or Separation Basics
- SelectQuote Life: Life Insurance After Divorce
- Probate and Trust Litigation Blog: Florida Now Has Post-Divorce Automatic Nullification Statute
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