One common provision in divorce settlement agreements should be looked over carefully by an estate planning attorney.
In divorce property settlement agreements it is common for the spouse who will be responsible for paying child support to agree to also maintain life insurance. The insurance benefits are meant to provide for the child support should something happen to the parent.
However, as the National Law Review points out in "How Divorce Can Impact Your Estate Plan," these life insurance provisions in divorce agreements are often flawed from an estate planning perspective.
Divorce attorneys do not normally also work with estates. From a divorce perspective a provision to have one parent obtain life insurance is adequate. However, from an estate planning perspective such provisions often leave out important details.
For example, the mere requirement to obtain life insurance would not stop the receiving spouse from using the entire sum for his or her own benefit. Even if the benefits are to be put in a trust for the benefit of the child, divorce settlement agreements often leave out instructions regarding what happens to any funds left in the trust after the child reaches the age of majority.
An estate planning attorney can look at a divorce agreement life insurance provision and suggest ways to improve it. He or she can also help ensure that the provision is carefully crafted so any life insurance benefits will go to the proper beneficiary, which is usually the child.
Reference: National Law Review (May 19, 2016) "How Divorce Can Impact Your Estate Plan"
