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Virginia law allows life insurance continuation to protect alimony

| May 18, 2022 | Family Law, Firm News

On behalf of Edward Barnes

Significant legislation gives state judges new power in spousal support orders to require life insurance protections for recipients in certain circumstances.

After a long and careful legislative process, the Virginia legislature passed an important law that gives a state court the power to order a life insurance policy to, in essence, insure that resources would continue for an alimony recipient beyond the paying ex-spouse’s death. The law took effect on July 1, 2107, and its provisions apply only to divorces filed on or after that date.

Roots of the new law

Historically, Virginia cases have viewed judicial power in divorce or dissolution of marriage narrowly. Specifically, judges have only been allowed to order the types of relief in divorce that are specifically allowed by state statute.

For example, in 1984, the Virginia Supreme Court said in Lapidus v. Lapidus that a Virginia judge did not have the power to order a divorcing husband to take out a life insurance policy that would name the wife as the beneficiary. The court noted that the divorce statutes did not provide this authority, so the order to procure life insurance was void.

Of course, the reason to order a spouse with an alimony obligation to name the recipient spouse beneficiary in a life insurance policy is to protect the payee financially should the payor die before the obligation to pay has ended.

The new law grew out of the work of a committee of the annual Boyd-Graves Conference of the Virginia Bar Association that studied this issue in depth. The members looked carefully at how other states handle the matter, both in their statutes and cases, and developed proposed legislation that evolved through the legislative process to become the law that passed.

Provisions of the new law

The new law gives a Virginia judge authority to order a divorcing spouse to maintain a life insurance policy that names the other spouse as the beneficiary (full or partial) for as long as the obligation to pay spousal support continues. The law provides:

  • The court may only order the continuation of a life insurance policy taken out during the marriage in which the payee was named the beneficiary; the use of a policy available through the paying party’s job; or a policy “within the effective control of the insured.” In other words, it appears the judge could not order the paying spouse to go out and purchase a new life insurance policy on the market for this purpose. In a policy otherwise qualified under the statute, the court can order the designation of the payee spouse as beneficiary if the policy terms permit. This could be necessary, for example, if the policy owner had changed the beneficiary to someone else in anticipation of divorce or in the case of a policy issued through an employer.
  • The premiums for the policy may be allocated between the parties.
  • The judge can order the insured spouse to make proper arrangements with the insurance company to keep the payee informed that the policy is in force with the payee as beneficiary.
  • The life insurance requirement stops when the alimony obligation ends.

The law directs the judge to consider factors “necessary or appropriate” to come to a “fair” order in this regard. The judge must also weigh a list of six specific factors, including the ages and health of each party, premium costs, nature of the spousal support award and others.

Either party can later move the court to modify the insurance order for a “material change of circumstances,” including the payor’s remarriage.

Named partner Lawrence D. Diehl of Barnes & Diehl, P.C., was the primary drafter of this legislation as well as an active member of the committee. He describes the bill as “one of the most important pieces of legislation passed in the family law area in many years.”

The lawyers at Barnes & Diehl, P.C., with offices in Chesterfield/Richmond, Henrico and Hanover/Mechanicsville represent and advise clients in divorce and other family law matters across the commonwealth of Virginia.