Sorting your assets during a divorce can be a headache for Maryland residents. There’s a lot to consider, from investment accounts to real estate.
With so much to figure out, it’s no surprise that some assets tend to slip under the radar. One asset that is commonly overlooked is life insurance.
Is a life insurance policy a joint or single asset?
Most life insurance policies are considered separate assets, especially if provided by your work. However, if you have a permanent life insurance policy that will follow you from job to job, it might be considered a joint asset.
It’s not the actual policy – it’s the cash value. So you’ll want to get the cash value of the policy before you can decide whether it’s worth dividing.
How to handle life insurance policies with kids
Parents might also want to use the life insurance policy as a cushion. For example, the primary custodial parent might want to keep a life policy on their ex to replace child support or alimony in the event of the ex-spouse’s early death.
If you’re a single parent – or expect you will be after the divorce – you might consider getting a policy for yourself. The main thing is you want to be able to provide for your kids if the worst were to happen.
First things to do
The first thing you’ll want to do during or after the divorce is to update your beneficiaries on your life insurance – or at least change the marital status. If your life insurance policy isn’t split during the divorce, you’ll want to update the policy to reflect a new beneficiary.