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How Life Insurance Works After Divorce:

Protecting child support & alimony income

Protecting child support or alimony income is especially important for the spouse who takes primary custody of the children after the divorce. The money this spouse receives in child support from the noncustodial parent is supposed to go toward feeding and clothing the children and saving for college. If the worst happens and the noncustodial parent is not around anymore, this income goes away and potentially leaves the custodial parent in a bind.

Thankfully, in the event of the paying/ higher earning ex-spouse passing away, their life insurance policy could be used as a replacement for child support or alimony payments. This comes with its own set of complications though. You must decide who to list as the beneficiary, whether or not the policy will funnel into an insurance trust, or what happens if the beneficiary designations change.

Life insurance policies are widely regarded as taxable upon your death. Taroff & Taitz, LLP recognizes your need to keep those funds out of your taxable estate through insurance trusts. Our attorneys will explain how the trust works, how you and your beneficiaries will benefit from it, and will most importantly manage the trust for you as needed.

Contact Taroff & Taitz, LLP today to help secure the future for your loved ones.

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