Protect children when life insurance expires

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Q: I just received a letter from our life insurance company advising me that my ex-husband’s policy has lapsed. When we divorced a few years ago, we each agreed to maintain insurance until our three children finished school. He has to maintain $1 million because he also earns double what I earn and pays child support. None of them have completed their studies and two are still in high school. I asked him to try to get it reinstated and he said he no longer qualifies because his blood pressure was so high. I think his blood pressure is high because he drinks a lot.

I’d rather not send him back to court, but I’m really concerned about his lifestyle and whether our kids will be able to go to college if something happens to him. What’s the best way to make sure our kids are okay if he drinks himself into a grave before they finish college?

A: If you want to avoid the court, you can seek other guarantees if he has enough assets. Does he have a pension? A house? Both? Depending on the value of his assets, you can offer him to use another property as collateral. Start with retirement, as this is the easiest alternative security given the beneficiary designation. Ask him to designate you as his retirement beneficiary until your children graduate instead of replacing the life insurance policy. The problem becomes – does he have a million in retirement?

Otherwise, consider the equity in his home as collateral. A real estate attorney can draft a mortgage where he grants you an interest in the equity in his home for as long as he is obligated to maintain a backing security. Be sure to register the mortgage so the world knows your interest and can’t deplete the equity by getting another mortgage that outweighs your interest. Then, when your youngest graduates, you can release the mortgage and release their equity.

These options would require you both to write an amending agreement that you will file with Probate and Family Court to commemorate the change you have made. This would save you from filing a contempt complaint about his lack of life insurance and give you enforcement rights regarding his retirement/equity.

If he refuses to accept, you must file a contempt complaint. He might say he can’t be held in contempt because the life insurance company won’t reinstate his policy. The problem is that by letting the policy expire, he violated the court order, so he is in contempt. Thus, he should be ordered to pay your legal costs and provide alternative security. If the judge orders the mortgage alternative, be sure to ask that he also be ordered to pay the fees of the real estate attorney.

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