It is an unfortunate reality that some parents pass away while their children are still young. Not only does the loss of a parent have a profound emotional impact, but it can also leave minor children without adequate financial support. Although it can be difficult to think about the worst-case scenarios, it is important for your children that you plan for the unexpected.
Can Texas Courts Order a Parent to Get a Life Insurance Policy?
In Texas, when a parent paying child support dies, the support obligation does not disappear. Instead, the full value of the child support obligation becomes a claim against the deceased parent’s estate. However, sometimes the estate does not have enough property to pay the full value of the claim.
To protect against this outcome, a judge can issue an order that requires a parent to acquire and maintain a life insurance policy. The judge can order you to obtain a decreasing term life insurance policy that establishes an annuity or insurance-funded trust payable to the surviving parent.
As a part of the order, the judge can require the parent to offer proof of the life policy to the court.
When Will a Texas Court Order a Party to Maintain a Life Insurance Policy?
Texas courts will not always order a parent to get a life insurance policy. The judge will look to various factors when deciding whether and how much life insurance to order. In addition, to looking at the parent’s assets to determine whether their estate would be large enough to pay your child support obligation, the judge will consider the following:
• The present value of the entire amount of monthly child support payments from the date of the order to the month the child turns 18; and
• The present value of the entire amount of dental and health insurance premiums payable for the child’s benefit from the date the support order is entered until the child turns 18.
If the child is disabled, the court will consider the probability that the support payments will continue after the age of 18 into adulthood.
Should I Have Life Insurance On The Father Of My Children If It Is Not Court-Ordered?
Even if the court does not order a parent to acquire and maintain a life insurance policy, parents can decide to purchase a policy on their own. Having life insurance is encouraged to protect your children in case the worst happens.
As a parent, you have an insurable interest in your child’s father because you would suffer a significant financial loss if they died. However, purchasing a policy on your ex requires their knowledge and cooperation. Together with your child’s other parent, you can decide how the premiums will be paid. You may be forced to make the premium payments if your ex will not.
Who Should Be Named as the Beneficiary of the Life Insurance Policy?
Deciding who to name as the beneficiary of the life insurance policy on the father of your child requires serious consideration. A few of the options are outlined below.
• The Child. One option is to name the child directly as the beneficiary. This may seem like the simplest option, but it can cause complications. If the child is a minor, the policy proceeds need to go to a court-appointed guardian (often the surviving parent). At the age of 18, the guardianship account is given to the child outright. This outcome goes against what many parents want because most 18-year-olds are not mature enough to handle a financial windfall.
• The Child’s Other Parent. Naming yourself, the child’s other parent appeals to many individuals because you are trusted to have the child’s best interests are heart. This strategy does have potential downsides. For example, the policy proceeds can be reached by the parent’s creditors, and there is no legal guarantee that the funds will be used on the child.
• A Custodian as the Beneficiary. Depending on the policy, you may be able to designate a custodian as a guardian under the Uniform Transfers to Minors Act (UTMA) for the benefit of the child. In Texas, a custodian can control the funds until the child reaches age 21.
Your Bedford Child Support Lawyer
If you have questions about life insurance, you should contact an experienced Bedford family law lawyer. The Law Office of Craig S. Michalk has helped the residents of Tarrant County navigate child support, divorce, and other family law matters for over 24 years. Call the Law Office of Craig S. Michalk today at 817-282-9895 for a free consultation. We look forward to the opportunity to discuss and assist you with your needs.