This is another of a series of blog posts in which I will be highlighting some of the more commonly asked questions of divorcing clients as to whether they can or can’t do certain things in regards to aspects of their financial or personal affairs. Once again, the thoughts expressed in this blog post should not be construed as being in the nature of legal advice, but merely serves as an overview of things to consider if you are a client asking these questions or a lawyer confronted with how to respond to them. Now let’s get to my next two commonly asked questions.
Can I change the beneficiary on my life insurance?
As with wanting to know if they can change their Wills, the last thing divorcing clients want is for their dreaded spouse to receive the proceeds of any life insurance policies they may have should the client die before the divorce is finalized. Unlike the situation with a Will discussed in my last blog post where the response involved more of whether one should than whether one can, when it comes to life insurance the answer is much more straight forward. The easy answer is that a spouse should not change beneficiary designations of life insurance during the pendency of a divorce proceeding in the absence of agreement or court order. While there is no law expressly regulating the beneficiary designation of privately held or maintained life insurance benefits, Rule 5:4-2(f) establishes the underlying policy that during the pendency of a divorce litigation, insurance coverages existing as of the time of filing, including the identification of named beneficiaries, are not to be cancelled or modified. Similarly, New Jersey statute N.J.S.A. 2A:34-23d provides:
“Upon filing of a complaint for an action of divorce, dissolution, nullity or separate maintenance, where the custody, visitation or support of a minor child is an issue, the party who has maintained all existing insurance coverage or coverage traditionally maintained during the marriage or civil union, including but not limited to all health, disability, home or life insurance, shall continue to maintain or continue to share in the cost of maintaining the coverage.”
While perhaps less than clear, I submit that the requirements of this statute applies to spousal insurance coverage, not just that of children. Simply stated, New Jersey law clearly requires that all existing insurance, including life insurance, is to be maintained during the pendency of a divorce action unless a Court Order provides otherwise. This follows the underlying philosophy that, pendente lite (the period between the filing of the divorce complaint and the entry of a divorce judgment), the object is to maintain the status quo to the maximum extent possible pending a full investigation of the case. See generally, Rose vs. Csapo, 359 NJ Super 53 (Ch. Div. 2002). Changing the beneficiaries of life insurance in the absence of an agreement or court order may not only be violative of the Court Rules and statute, but they doing so could implicate the rights of third parties. If the beneficiary designation of life insurance is changed from the spouse to a third party and the insured dies during the pendency of the divorce, that new beneficiary would have a vested right to those proceeds upon death. The insurance company would be obligated to pay those proceeds to the designated third party beneficiary. Attempting to undo this could involve extensive litigation, potentially involving not only the decedent’s estate, but the insurance company and third party beneficiary, with the issues to be litigated to include whether there was an existing duty to maintain life insurance, whether there was a violation of that duty, whether a duty of support to the aggrieved spouse had been established, or for the imposition of equitable remedies. Again, the simple answer to this question is NO – Don’t do it!
Can I move out?
It goes without saying that for many going through a divorce, it is a stressful and emotional time. While some break-ups are amicable, for most, that each spouse has negative feelings towards the other would be an understatement. There is no love lost between the parties. Often, particularly at the outset of the divorce, those parties continue to live under the same roof. Some are able to tolerate being around the other. For others, it is like walking on eggshells, being in a constant state of unpleasantness or engaging in recurring skirmishes. Then there are those whose feelings for the other boil over into hatred and being in a constant state of war with the other. Assuming that this behavior does not rise to the level of “domestic violence,” a spouse may reach a point of asking whether they should just move out or separate from the other spouse. While there is no “law” prohibiting one from doing so, there are often more practical, if not strategic, considerations of whether moving out during the pendency of a divorce action is appropriate or not.
Perhaps, if the parties have no children, are each gainfully employed in well-paying jobs, and the spouse thinking about leaving had no strong desire of wanting to retain the marital residence, simply moving out may be a reasonable option. Other than not wanting to give the other spouse the satisfaction, or wanting to keep the pressure on to facilitate a resolution, often the emotional benefits of moving out outweigh any perceived benefits of remaining. For many, moving out is not financially feasible, even if there are no children involved, and which necessarily create a whole new set of living expenses which the marital finances may not afford at that juncture. If one spouse earns considerably more than the other, support implications may come into play. Often the marital residence is owned jointly by the parties as tenants by the entirety, creating not only joint ownership rights, but joint possessory rights in the property as well. If there are children involved, that creates a whole other set of considerations and concerns. If there are bona fide issues of custody and parenting time, moving out could dramatically affect those issues, and potentially create a status quo that might be difficult to overcome.
Clearly, whether a spouse should move out or separate from the other may have significant implications in the case. It can have serious consequences, and should never be done without a thorough assessment of the pros and cons between the client and attorney, and is truly dependent upon the facts and circumstances of any given case. The attorneys at James P. Yudes, PC are here to assist you in navigating through this process.