Minnesota couples who are considering a divorce face many questions and challenges. Both parties should consider how a divorce will affect their individual financial situations. Most people focus on how they will split traditional assets such as the marital home, investment accounts and automobiles. But many divorcing people also must consider other parts of the financial partnership that will be affected by divorce.
One financial expert explains that many people are unaware of the implications of divorce for health and life insurance policies and Social Security benefits. All three of these things can play a significant role in shaping each person's financial future. Accordingly, a couple must plan for changes to these policies and benefits during the divorce process. This is especially true where a disparity in income between the couple is substantial.
With regard to health insurance, Minnesota law provides that once the divorce is final, a person may or may not be able to continue coverage through a former spouse. The question turns on whether the insurance plan is fully insured group coverage or self-insured group coverage. Regardless of the coverage type, however, dependent children continue to have access to health insurance plans until they reach the maximum age stated in the policy.
When it comes to life insurance, a person can remove a spouse as a beneficiary either before beginning the divorce or after the divorce is final. But a court may require a former spouse to maintain life insurance coverage to secure alimony or child support payments. In addition, the spouse who is likely to receive alimony or child support should consider purchasing a separate life insurance policy on the other person before the divorce is final. The extra policy can serve as a safety measure in case the former spouse defies a court order and fails to maintain the primary policy.
Finally, divorcing couples over the age of 62 may be entitled to some of their ex-spouses' Social Security benefits. This depends on the length of the marriage and the amount of each person's expected benefits.
Items like health insurance, life insurance and Social Security benefits can have a big impact on people's financial lives. Minnesota couples seeking divorce should plan for how all of these issues could affect their future.
Source: Forbes, "Three of the Most Frequently Asked Questions About Health Insurance, Life Insurance and Social Security After Divorce," Jeff Landers, June, 5, 2012