Unboxing Divorce: Protection Against Death and Default

What if you negotiate your entire agreement, sign it, and then someone dies or simply can’t or won’t fulfill their obligations? Hi, I’m Katherine Miller, and I’ve been a divorce attorney in New York City and New York State for over 30 years. This is part of my unboxing divorce series, focusing on how to protect against death and default in divorce.

First, let’s talk about the issue of death. Imagine you have a long-term support agreement, or both parties have committed to responsibilities like paying for college, summer camp, or general support for the children. If one person unfortunately passes away before fulfilling these obligations, it’s crucial that the settlement agreement addresses this scenario. There are two main ways to handle it.

The simplest and most straightforward approach is through life insurance. A term life insurance policy can ensure that each person’s obligations—whether to the other party, the children, or as outlined in the agreement—are met. This way, life insurance payments will cover these commitments.

However, if life insurance isn’t possible due to prohibitive costs or unavailability (such as in cases where someone is a cancer survivor or has other health issues), we take a different approach. This part is a bit technical, so bear with me. We create a charge against the estate of each person, meaning that if they pass away, the contractual obligations can be enforced against their estate—whatever assets they leave behind. Of course, if no assets are left behind, enforcement becomes impossible, which is why I prefer life insurance as the first option. But if that’s not feasible, addressing it in this way is still better than leaving it unresolved.

Now, let’s discuss the issue of default. This is extremely important because people often worry, “What if he doesn’t pay?” or “What if she just walks away and doesn’t fulfill her obligations?” It’s vital that each agreement includes a default provision. This means that if one party fails to meet their obligations under the contract, there are penalties in place. One crucial penalty is that the defaulting party—the one who doesn’t do what they’re supposed to—must pay the legal fees and court costs of the other party who is trying to enforce the agreement.

I know this can seem overwhelming, and if you’d like me to explain these concepts in simpler terms, feel free to provide your contact information below. Click here to download “People Sizing Divorce,” which helps clarify and simplify these divorce-related issues. Thanks for listening.