Spousal and Child Support After Death
Aug 5, 2021
One area of discussion in separation and divorce settlements that clients must address is deciding what happens if one or both spouses dies. It may sound more like an estate planning concern, but the two are intertwined to some degree. If your separation or divorce agreement involves the payment of child support or spousal support payments, deciding how the support will continue after your death is extremely important for several reasons.
Security for support obligations must be in place to ensure that the needs of dependents are met. In addition, if a property payment is being made over time, the payor will need to provide some security through their estate or life insurance in the event of an unexpected death before the final payment has been made.
In co-parenting situations, children spend time living with each parent, and both parents share financial responsibility for the children. Child support payments may or may not be made. However, if one parent dies, the responsibility now falls entirely on the surviving parent. This could cause a financial strain or mean that the circumstances of the parent and children will need to change. To prevent that from happening, you can take out a life insurance policy. The policy amount should be sufficient to replace the amount of money that would be lost if your financial input were to stop. You can choose to make your estate the beneficiary of the life insurance policy. Your will then specifies how and when the money is given to the children. Otherwise, if you trust your spouse, you can make them the beneficiary of the insurance policy. They will have easier access to the money after your death and can use or invest it on behalf of the children, as they see fit. It is often helpful to consult an estates practitioner to ensure that the life insurance trust provisions are properly drafted.
Paying Child Support
The situation is similar if you make regular child support payments to your spouse, as agreed upon in your divorce agreement. You will want to ensure that your child’s quality of life doesn’t suffer due to financial reasons if you are no longer living to pay the support. Life insurance is also a good option in this situation. Alternatively, you can choose to specify in your will that your estate should continue to make support payments until your children reach a certain age or complete a level of education.
Paying Spousal Support
Spousal support obligations after your death may differ depending on the terms of your divorce agreement. Specifying that spousal support should only continue until a specific date or for a certain period of time after your death is a good idea. Otherwise, if your estate has the assets to support it, your spouse could be entitled to continuing spousal support until their own death.
One important thing to take into account, when dealing with spousal support, is that periodic spousal support payments after death are not tax deductible to the payor’s estate or taxable to the recipient. As a result the support payments made while alive, will have to be adjusted if the agreement contemplates continued periodic payments after death
Keep Your Will Up-to-Date
When you negotiate a separation agreement, it is also a good time to also update your will. If you don’t have a will, it is time to write one. Doing so helps to ensure that you can adequately provide for your children after your death and goes to the right people to manage it. An up-to-date will also prevents your spouse from receiving more of your estate than they are entitled to. Although divorce revokes a will, separation does not and you need to make sure that your will does not result in your spouse being able to benefit from a gift in an outdated will.
Deciding how to handle child and spousal support payments after you die may seem unnecessary when you are young and healthy. However, not doing so can have an enormous impact on the people relying on your financial support. Get in touch with a family lawyer to help sort out the details so nothing is overlooked.
Kelly D. Jordan is a family lawyer located in Toronto, Ontario. Kelly is considered a specialist in all areas of family law and can help you work towards estate planning that fits with your obligations under your divorce agreement.