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Essential Facts About New Jersey Divorce, Children, and Life Insurance

Many people make it a point to obtain life insurance once they begin to have children and start a family. The idea is that these individuals want to make certain that their children are financially protected should they die prematurely and while their offspring are still minors. Approximately 50 percent of New Jersey marriages end in divorce. This stark reality raises the question of what happens to life insurance when parents divorce.

There are a trio of primary issues that warrant consideration when it comes to a discission of New Jersey divorce, children, and life insurance coverage:

  • Agreement between parents to maintain life insurance for benefit of children
  • Court order to maintain life insurance following divorce
  • Impact of remarriage and new children on standing order regarding life insurance
Agreement between Parents to Maintain Life Insurance for Benefit of Children

New Jersey courts encourage spouses in a marriage dissolution case to attempt to resolve issues through negotiation, including by working out differences with the aid and assistance of a divorce attorney. With that in mind, if the matter of life insurance is at issue in a divorce case, in the best-case scenario, the parties at least attempt to resolve such a matter without the need for a full-blown court hearing.

The parties can include their agreement regarding the maintenance of life insurance within a broader marital settlement agreement. For example, the parties might decide that they each want to maintain a life insurance policy for the benefit of the children until the minors reach the age of 18.

Whatever the parties agree and include in a settlement agreement is subject to review by the court. The court determines whether such an agreement regarding life insurance and other issues is in the best interests of the children.

Court Order to Maintain Life Insurance Following Divorce

There are a pair of circumstances in which a court may order one or both parents in a New Jersey divorce to maintain life insurance for a child or children born of a marriage. First, one or both parents may already have a life insurance policy with the spouse, the children, or a combination of the spouse and children as beneficiaries. A court in a marriage dissolution proceeding may elect to order a spouse that already has a life insurance policy to keep it in force, with the children as named beneficiaries, until a child reaches the age of 18.

Second, there are instances in which a married couple does not have life insurance, even when they are parents. When spouses in such a situation divorce, the prospect for financial instability going forward oftentimes is a significant concern. Such instability would severely worsen if one of another of the parents were to pass on at an earlier stage in their own lives. Thus, a court in a marriage dissolution case may determine that the best interests of a child or children is served by ordering one or both parents to maintain a life insurance policy with the child or children named as beneficiaries. The order likely would mandate such a policy remain in force until offspring reach the age of 18.

Impact of Remarriage and New Children on Standing Order Regarding Life Insurance

Oftentimes following a New Jersey divorce, one or both parties to such a case ends up remarrying and starting a new family. If that were to occur, a standing order from a marriage dissolution case would not permit a parent starting a new family to add children from the subsequent marriage as beneficiaries to the life insurance policy previously designated to benefit the children from the nuptials that ended in divorce. Certainly, a person starting a so-called new family can obtain another life insurance policy and name the spouse and children from the subsequent marriage as beneficiaries under a second policy of life insurance.

If you are contemplating divorce, or if you have questions or issues arising from an existing marriage dissolution decree, the legal team at the Law Offices of Peter Van Aulen is available to provide you the answers you need. You can reach us any time by calling our firm at (201) 845-7400 to schedule a free initial consultation at your convenience.

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