Throughout the course of a high net worth divorce, the finances, assets and property of each spouse will be examined and evaluated in the process as the parties move toward determination of a settlement and possibly alimony and/or child support payment amounts.
Among the property under consideration is a spouse’s life insurance policy. Of course, after a divorce the policyholder may choose to remove an ex-spouse as beneficiary; but that is not the topic of this post. There is a financial transaction called a viatical settlement, or life settlement, in which a person’s life insurance policy is sold to a third party for a cash payment in a lump sum format.
Generally speaking, viatical settlements became popular with terminally ill policyholders, as a way to raise cash for necessary expenses, for example. The life settlement industry grew up around this surge, and many states, including California, created regulatory bodies and statutes regarding the brokering, selling, and redemption of life insurance policies to third parties. There have been landmark legal cases involving disputes over who is entitled to the policy payout, as well as cases involving fraudulent policy creation.
If you are pondering how this practice relates to divorce, there are a few potential connections. A person purchasing a viatical settlement is making an investment of sorts, based on the intangible factor of a person’s lifespan. This “investment” would certainly be counted as property in a divorce proceeding involving the investor(s). Also, it is possible that the cash payment could be concealed or not reported by a spouse wishing to withhold or punish a soon-to-be-ex-spouse. An experienced family law attorney knowledgeable in high net worth divorce practice can further elucidate on this subject, as well as possibly speaking to the propriety or appropriateness of life settlements as a potential investment.
Pease keep in mind that the content of this blog is intended not as legal advice or as an implied endorsement for investment possibilities, but only for information and/or discussion purposes. Should you have questions or concerns about how California family law may apply to you, you may wish to consult a knowledgeable family law attorney.
As Orange County’s premier family law specialists, the attorneys at Dinnebier & Demmerle can provide answers to your questions and concerns, clarify and establish your legal rights, and represent you in court. If you would like more information about emancipation or any other aspect of California family law, please call to set up a consultation. We’re ready to move forward when you are. Just contact us in Tustin at 714-838-1099.