Understanding Life Insurance in Oregon Family Law Cases
In the realm of family law, life insurance often emerges as a crucial consideration. Many clients are surprised to learn that life insurance policies can significantly influence outcomes during divorce proceedings or other family law matters. Here, we delve into three primary ways life insurance is addressed within this legal context.
Life Insurance as an Asset Division Tool
Certain types of life insurance policies, such as whole life or universal life policies, possess cash surrender values. This feature allows the policyholder to either cash in the policy or borrow against it. Consequently, these policies are treated as assets during divorce proceedings and must be divided accordingly by the court. For example, if a couple owns a whole life policy with a substantial cash value, it will be listed among their marital assets. The court will then determine an equitable division based on Oregon's property division laws.
Securing Support Obligations with Life Insurance
Life insurance also plays a pivotal role in securing child support or spousal support obligations. According to ORS 107. 820 , when one party is obligated to provide financial support, the court often mandates that they maintain a life insurance policy sufficient to cover these obligations should they pass away before fulfilling them. The purpose of this requirement is to protect the dependent party from financial instability resulting from unpaid support due to the obligor's untimely death. Courts typically restrict any changes to the beneficiary designation or coverage amount without prior approval. Additionally, insurers may need to notify beneficiaries about any modifications made by the policyholder.
Protecting Retirement and Pension Interests with Life Insurance
In some cases involving retirement benefits or pension plans awarded during divorce proceedings, courts may order one spouse to maintain existing life insurance policies for protecting these interests. This ensures that if an obligor passes away prematurely, their former spouse still receives their entitled share of retirement benefits. This approach provides security for dependent spouses who rely on pension income post-divorce and aligns with equitable distribution principles under Oregon law.
Consulting an Experienced Family Law Attorney in Oregon
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