Source: https://www.divorceny.com/insurance/dlit/
Timestamp: 2019-04-19 08:20:08+00:00

Document:
It has been held error not to award insurance to secure support on distributive award payments. Charles v. Charles, 53 A.D.3d 468, 861 N.Y.S.2d 135 (2nd Dept. 2008: requiring the husband to maintain a life insurance policy for the benefit of the wife in an amount not less than $ 1,500,000 during years 1 through 5 of his maintenance obligation, and thereafter, during years 6 through 10, the defendant shall maintain said policy in the amount of not less than $ 750,000, and during years 11 through 15 in an amount not less than $ 500,000).
However, in Alexander v. Alexander the First Department on April 8, 2014 held that it was proper for a lower court to decline to order insurance where the “wife elicited no evidence relevant to the issue.” What evidence is necessary; the cost of premiums, insurability, the decreasing present value of the divorce payments over time?
One line of cases has held that because a decreasing term award is “difficult to administer,” a fixed amount of insurance is preferable (see Mojdeh M. v. Jamshid A., 36 Misc. 3d 1209(A); 2012 N.Y. Misc. LEXIS 3176; 2012 WL 2732169 [Sup. Kings]). Other courts have found decreasing term preferable. R. M. v. C. M., NYLJ 1202651473470, (Sup. Westchester 3/21/2014 [Christopher, J.]); A.C. v. J.O., 40 Misc. 3d 1226(A), 975 N.Y.S.2d 707 (Sup. Kings 2013).
Even should a specific order be entered directing a party to maintain life insurance and be sent to the existing life insurance company, much like a Qualified Medical Child Support Order, overseeing whether the policy remains in effect may be difficult. The failure to maintain the policy may be disastrous. Thus, it should be preferable for the beneficiary spouse to own the policy (see, Gay v. Gay [4th Dept. 6/13/2014]).
On the other hand, the insurance should not create a windfall, and requiring a support payor to use his or her after-tax dollars to pay premiums is a substantial additional burden.
Thus, the Divorce Life Insurance Trust is proposed. A trust is created to own the policy. The co-trustees are the benefitting spouse and someone chosen by the obligated spouse. On death, the proceeds are used to make the payments required by the decree when, as and if accrued (solving the issues of maintenance terminations on remarriage; college cost variables, etc.). Upon the termination of the divorce obligations, the balance gets paid over to the decedent’s estate (or other named beneficiaries). Of course, allowing decreasing face amounts, may also be brought into the mix. Easier to police and administer; no windfalls.
The statute, however, may not allow for this. It provides only that “either spouse or children of the marriage” be the “irrevocable beneficiaries.” However, it is suggested that the statute be amended or interpreted to allow for this. Of course, the parties may always stipulate to it.
In Marfone, Clifford C. Eisenhut of Kalil & Eisenhut, LLC, of Utica, represented the husband.
In Gay, John A. Cirando, of counsel to Melvin & Melvin, PLLC, of Syracuse, represented the husband. Jon W. Brenize, of Macht, Brenizer & Gingold, P.C., of Syracuse, represented the wife.

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