Section 2206 of the Internal Revenue Code provides:

Unless the decedent directs otherwise in his will, if any part of the gross estate on which tax has been paid consists of proceeds of policies of insurance on the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds of such policies bear to the taxable estate.

[26 U.S.C.A. § 2206.]

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Insurance on the life of the decedent receivable by a beneficiary other than the executor originally appeared on NJ Family Issues on December 16, 2011.

A court may order the maintenance of life insurance as a means of securing both alimony and child support. N.J.S.A. 2A:34-25; Konczyk v. Konczyk, 367 N.J. Super. 551, 557 (Ch. Div. 2003), aff’d o.b., 367 N.J. Super. 512 (App. Div. 2004).

The quantum of life insurance, however, must bear some relationship to the amounts secured.

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A court may order the maintenance of life insurance as a means of securing both alimony and child support originally appeared on NJ Family Issues on August 20, 2011.

N.J.S.A. 2A:34-25 permits courts to order “[either] spouse to maintain life insurance to protect the former spouse [or the children of the marriage] in the event of the payer spouse’s death.” Jacobitti v. Jacobitti, 135 N.J. 571, 573 (1994).

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Courts may order either spouse to maintain life insurance to protect the former spouse or the children of the marriage in the event of the payer spouse’s death originally appeared on NJ Family Issues on April 11, 2011.

Pursuant to N.J.S.A. 2A:34-23, in any pending matrimonial action or after the entry of a judgment of divorce, a “court may make such order as to the alimony or maintenance of the parties . . . as the circumstances of the parties and the nature of the case shall render fit, reasonable and just, and require reasonable security for the due observance of such orders.” Moreover, trial courts are specifically authorized to order either spouse “to maintain life insurance for the protection of the former spouse” in the event of the payor spouse’s death. N.J.S.A. 2A:34-25. The purpose of life insurance is to assure a sufficient fund for the payor’s support obligation should he die before fulfilling that responsibility. Jacobitti v. Jacobitti, 135 N.J. 571, 580 (1994).

As the Supreme Court has noted, “the function of alimony can be maintained after the obligor’s death by substituting insurance proceeds, and such a provision is commonly made in property settlement agreements as well.” In re Estate of Roccamonte, 174 N.J. 381, 398 (2002). Of course, “each case must stand on its own facts and deference must be given to the trial court’s ability to weigh the equities and take appropriate action.” Meerwarth v. Meerwarth, 71 N.J. 541, 544 (1976).

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Trial courts are specifically authorized to order either spouse to maintain life insurance for the protection of the former spouse in the event of the payor spouse’s death originally appeared on NJ Family Issues on April 4, 2011.

“Children of a marriage are third-party beneficiaries of a settlement agreement between their parents.” Flanigan v. Munson, 175 N.J. 597, 606 (2003). “In that regard, a court in a matrimonial matter is authorized to direct parents to maintain life insurance naming their minor children as beneficiaries to secure the parents’ continued support obligations.” Ibid.

In Raynor v. Raynor, 319 N.J. Super. 591, 613 (App. Div. 1999), the court interpreted the phrase “life insurance policy provided by his employer[,]” to provide security of continued support for the children without regard to where defendant was employed); see also, Meerwarth v. Meerwarth, 71 N.J. 541, 544 (1976) (holding husband required to obtain life insurance for protection of former wife and children). Thus, an obligation to maintian life insurance terminates upon the child’s emancipation, not decedent’s change of employment.

This interpretation is consistent with parents’ statutory obligation to support their children until emancipated. Kiken v. Kiken, 149 N.J. 441, 446 (1997). N.J.S.A. 2A:34-23 authorizes courts in matrimonial actions to order parties to provide for education and maintenance of children and to create “trusts or other security devices” for that purpose. See also Grotsky v. Grotsky, 58 N.J. 354, 361 (1971) (stating the Chancery Division “may enter a support order for minor children to survive their father’s death and may direct the father to maintain his insurance, naming the minor children as beneficiaries,” to ensure they are provided for adequately).

Just as parent is not relieved of his obligation to pay child support prior to his death, once the life insurance obligation was incorporated into the FJOD, decedent “could not have modified it unilaterally without applying to the trial court.” Flanigan, supra, 175 N.J. at 607.

The responsibility to seek modification rested with decedent.

N.J.S.A. 2A:34-23d(b) [compels a party whose insurance benefits change as a result of a change in employment to notify the other party] reflects the Legislature’s intention to assure that courts have authority to require the maintenance of insurance coverage. Capaccio v. Capaccio, 321 N.J. Super. 46, 59 (App. Div. 1999).

NOTE: My legal services include family law, divorce, child support, litigation, arbitration, mediation, child custody and visitation, alimony, equitable distribution, separation agreements, palimony, PSA, property settlement agreement, premarital and prenuptial agreements, midmarriage and marital agreements.

The Chancery Division may enter a support order for minor children to survive their father’s death and may direct the father to maintain his insurance, naming the minor children as beneficiaries, to ensure they are provided for adequately originally appeared on NJ Family Issues on March 16, 2011.

Alimony is an allowance for support and maintenance when spouses are living separate and apart or are divorced. Davis v. Davis, 184 N.J.Super. 430, 446 A.2d 540 (App.Div.1982). Our Legislature has addressed alimony at N.J.S.A. 2A:34-23 et seq.

The Court may require “reasonable security” for alimony. N.J.S.A. 2A:34-23.

Historically, and under the common law, alimony stopped when the obligor died because alimony is personal to the paying spouse. Jacobitti v. Jacobitti 135 N.J. 571, 573, 641 A.2d 535, 536 (1994). Thus, courts would not enforce “post mortem” alimony. Over the years, that principal has been eroded somewhat as courts have looked to the provision of life insurance or trusts to provide financial security to spouses or children after the death of the paying spouse. See Meerwarth v. Meerwarth, 71 N.J. 541, 366 A.2d 979 (1976); Davis, supra., 184 N.J.Super. at 430, 446 A.2d at 540. Our statutes continue to recognize the principle that alimony terminates at death.

Alimony shall terminate upon the death of the payer spouse, except that any arrearages that have accrued prior to the date of the payer spouse’s death 1194 shall not be vacated or annulled. [N.J.S.A. 2A:34-25].

However, the statute now further provides that,

[n]othing in this Act shall be construed to prohibit a court from ordering either spouse to maintain life insurance for the protection of the former spouse or the children of the marriage in the event of the payer spouse’s death. [Id.].

Because life insurance is only payable after the death of the insured and generally passes outside the insured’s estate to the beneficiary of the policy, this protection for a surviving spouse or child arguably could constitute post mortem alimony. However, the issue of whether life insurance can be used as security for alimony or child support payments has long been put to rest in New Jersey. See N.J.S.A. 2A:34-25; Meerwarth, supra., 71 N.J. at 541, 366 A.2d at 979 (husband required to obtain life insurance for protection of former wife and children); Davis, supra., 184 N.J.Super. at 430, 446 A.2d 540 (husband required to provide life insurance as security for wife’s alimony in the event husband predeceases wife); Hirko v. Hirko, 166 N.J.Super. 111, 398 A.2d 1353 (Ch.Div. 1979) (court allows levy on cash value of life insurance to satisfy judgment for alimony arrears); Grotsky v. Grotsky, 58 N.J. 354, 277 A.2d 535 (1971) (insurance to secure child support); see 11 N.J.P.A.R. at § 33.3 (“Security for Support Obligations”).

In cases where the insurance obligation functions as security for the support obligation, courts have shown a willingness to limit payment of insurance proceeds to conform with the underlying obligation and avoid a windfall to the supported spouse or his/her estate.

A person who is required to be named as the beneficiary of life insurance under a divorce decree has a vested equitable interest in such life insurance. 22 Causes of Action, § 463, Sec. 2. See Travelers Ins. Co. v. Johnson, 579 F.Supp. 1457 (D.N.J.1984).

The “protection” that a plaintiff is owed is the alimony due to her under the Final Judgment of Divorce at the time of the obligor’s death. The full policy (if it exceeds the amount owed) should be paid to plaintiff because such a result would create an unfair windfall for plaintiff.

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A person who is required to be named as the beneficiary of life insurance under a divorce decree has a vested equitable interest in such life insurance originally appeared on NJ Family Issues on April 17, 2003.