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When life insurance is treated like alimony

Many Maryland residents pay alimony to an ex-spouse. To most of them, alimony is unmistakable. It’s a payment they give to their former spouse on a monthly basis. But to some, alimony presents itself in a different form but may be treated differently by the court. Case in point: a life insurance policy ordered by the court after a divorce.

This is not common, but it did happen to one couple who were married for 35 years. The man was ordered to obtain a $100,000 life insurance policy with his ex-wife as beneficiary. The policy was to last for 12 years. The final divorce decree explicitly stated that the life insurance was to be treated as property division, not alimony. However, when the ex-wife remarried several years later, the man fought the order and asked that the life insurance be terminated.

The ex-wife fought the decision and the court agreed, stating that the life insurance was a fixed obligation. The man appealed and the appellate court sided with him, stating that life insurance has an indefinite duration and that it cannot be considered property division because the man’s life expectancy was unable to be determined. As such, it was considered periodic alimony and because the divorce decree did not state otherwise, it terminated once the ex-wife remarried.

Alimony is given to a former spouse as a means of financial support. The guidelines regarding eligibility for alimony are not always clear. Some courts come up with alternatives to alimony, so it can be hard to determine how long it should last. It may last until the receiver remarries or dies, or even after the payer dies. It is important to consult the divorce decree or get clarification from a qualified divorce lawyer.

Related Posts: Know the impacts of choosing a lump-sum alimony payment, Seeking enforcement action for court-ordered support in Maryland, Spousal support isn’t automatic in divorce, Consider different arrangements for alimony payments, Lump sum payments: Monthly alimony payments might be avoidable,
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