INSURANCE AND ANNUITIES IN DIVORCE
When going through a divorce, understanding your insurance policies is crucial.
As a high-net-worth woman, your family might have life insurance, annuities, and other insurance products in place from your marriage. But here's the truth: these were not designed with divorce in mind.
Key Steps to Take:
✅ Identify What You Have: Gather all your insurance documents and list out your life insurance policies, annuities, and other relevant insurance products.
✅ Contact the Insurance Company: Call your insurance providers to get the full details on your policies, including beneficiaries, cash values, existing loans and any potential penalties for changes.
✅ Evaluate Your Options: Decide if it makes sense to split these assets. Consider the long-term benefits and any tax implications. This is where a knowledgeable divorce financial advisor can provide invaluable guidance.
✅ Change your beneficiaries: If you decide that keeping these policies makes sense for you post-divorce, make sure you change your beneficiaries as needed. Most likely your spouse was the primary beneficiary - that may or may not need to change, depending on the purpose of keeping the policy.
Client story: I recently worked with a client who had life insurance policies from the marriage in an irrevocable life insurance trust naming her as SPOUSE which was NOT disclosed during Discovery or Mediation. This was a typical litigation case with two attorneys. Due to current state of SC estate laws, she would not qualify as the “spouse” as stated in the trust and potentially would not be recognized as the Trustee (and beneficiary), which would trigger other family members being trustee and beneficiary. This is true of other state laws as well. Irrevocable trusts by nature cannot be changed! TFK® pulling back the curtain on all these details has helped my client negotiate a new life insurance policy on her former spouse because of the language in her marital settlement agreement requiring him to have life insurance for her benefit negotiated at her mediation! It is critical for your attorney to know what documents to request in the Discovery phase. We can help with those details!!
Remember, the number one step is to find out what you have and understand your options. Navigating insurance during a divorce can be complex, but with the right information and support, you can make the best decisions for your future.
Need help understanding your insurance policies and planning your financial future post-divorce? Contact us today for personalized financial planning and support. Let's ensure you thrive on the other side. ✨
The Financial Knot® is another business name for Independent Advisor Alliance, LLC. All financial planning advice is offered through Independent Advisor Alliance, LLC, a registered investment advisor.
