The above comment is one I’ve heard several times over the decades. It can be devasting when a partner, whom you believed would be with you forever, suddenly announces that they have elected a spousal upgrade.
The fair division of relationship assets and custody battles for children can become nasty often resulting in protracted legal battles and expensive legal bills.
If you split from your partner, or spouse, you need to talk with a lawyer. Each partner will have their own lawyer. The division of assets will be discussed and ownership structures altered appropriately.
Something that can be overlooked, unfortunately, is the ownership of insurance policies. Is a policy owned by the life assured? Is it jointly owned? Or, is it owned by the spouse (soon to be the ex)?
Only the policy owner/s will be paid an insurance benefit. A long time ago I took out an insurance policy for my daughter. She is the life assured. I am the policy owner. If a claim is payable, it will be paid to me. Initially, the purpose of the cover was to protect my business and me if something happened to her. If you can continue to effectively operate a business while one of your children is suffering from a serious illness, or worse, dies you are very stoic. Personally, I think I’d be an emotional mess which is why I insured her. My daughter knows that I would support her and/or her family appropriately if she suffered a serious trauma or died. She has peace of mind knowing that her Mum would look after her best interests.
A client recently contacted me and said that she had been diagnosed with breast cancer. She said it wasn’t surprising due to all the stress she’s been through over the last two years. I thought she meant the ubiquitous Covid trauma. She told me that her primary trauma was that her husband had left her. Sometimes this is not too stressful and can be a relief to both spouses. Other times it is an absolute shock and it’s devastating. In addition to the unexpected departure of her spouse, there had also been two deaths in her family.
The couple split up, agreed to a fair division of their assets, and are now legally separated. Unfortunately, the couple over-looked reviewing their insurance plan. They never contacted their insurance adviser (me) when they were separating. Ideally, the lawyer would mention the importance of reviewing the ownership of insurance policies but this was apparently not on the lawyer’s checklist.
My client contacted me when her breast cancer was diagnosed hoping that she might have some sort of insurance in place. The possibility of a multi-hundred thousand dollar benefit payable to her was imminent but then I looked at the ownership structure of the policy. I asked why the policy was owned by the husband and not at least jointly. My client had no idea. Proceeds from an insurance benefit are paid to the policy owner NOT to the life assured. While the woman has received a cancer diagnosis and would appreciate the benefit being paid to her only her ex-husband is legally entitled to the full benefit.
Maybe the client’s ex will make a payment to his ex. He is not obliged to (other than morally). My client didn’t want to tell her ex that she had cancer but now she has to. Then she has to ask him to sign the insurance claim form and agree to the benefit being paid into her bank account. Will he do the right thing? Or, will he pay off the mortgage that he has with his new partner?
Lesson:
When there is a change in the status of a relationship make sure you review your insurance programme.