Does Life Insurance Pay For Alimony If The Payer Dies?
Alimony is intended in to support ex-spouses living separate and apart, typically after they are divorced. As a divorce attorney here in Middlesex County, New Jersey for the past two decades, I know that New Jersey family courts may require a supporting spouse to maintain insurance to be used as security for alimony and child support. However sometimes the alimony left to be paid is fair less than the value of the insurance. This is where having an experienced divorce lawyer is essential. This is because a savvy alimony attorney shall craft a Property Settlement Agreement that allows for a reduction of the amount of insurance being held after each year of alimony passes. However, when the lawyers are not specific, you may end up back in court for a judge to resolve the ambiguity.
In Konczyky v. Konczyky, the Superior Court of New Jersey, Family Part, Burlington County answered the question whether, an ex-wife, Patricia Konczyk, was entitled to receive $15,000 in life insurance proceeds, if under the Final Judgement of Divorce, only $ 2,000 in alimony remained to paid to her at the time of her ex-husbands death. This was a question of first impression within the State of New Jersey.
In this post-judgment motion, Patricia sought $ 15,000 in life insurance benefits, and further requested a lien in the same amount against the proceeds of any life insurance policies or against any property that belonged to her ex-husband’s estate. In addition, Patricia also sought $ 5,000 from the estate for a savings passbook account in the same amount, which she alleged, her now deceased ex-husband, Jerome, opened for her. Patricia also requested attorney’s fees and costs for the filing of the motion.
The executrices of the estate entered an appearance pro-se. An executrix is a person named in the will to carry-out the deceased last wishes. Appearing pro-se means appearing on ones own behalf, without a lawyer. The executrices requested that Patricia’s motion be denied, or that she provide evidence of the life insurance policy. They also sought cost for the motion.
Patricia and Jerome were divorced by a Final Judgment of Divorce filed on April 8, 1996. On February 20, 1996, the actual settlement was placed on the record before the Court. The Final Judgment of Divorce addressed specific real property owned by the couple, allowed Patricia to keep $ 44,000 “she took at the time of the separation, allowed Jerome to keep one hundred percent of the “Harris 401K”, addressed household possession and cars and provided that forty percent of Jerome’s pension was to go to Patricia, and another forty percent to himself. Jerome was to pay alimony as follows: $ 200 every month for five years, upon signing of the Final Judgment of Divorce, and after the five years were over the alimony would be reduced to $ 100 every month until such time as Jerome reached the age of 65. The Final Judgment also provided that in the event that Patricia remarried, Jerome’s alimony obligation should end.
The Final Judgment of Divorce further provided that Patricia would keep the life insurance policies in her possession, and that Jerome waived his interest in the same. Jerome agreed that within ninety days from the signing of the Final Judgment of Divorce, he shall produce proof of $ 20,000 worth of life insurance, or its equivalent, for Patricia’s benefit to remain in effect until Jerome’s death. The Final Judgment of Divorce further provided when Jerome’s obligation to pay alimony decreases to $ 100 per month, after five years from the date of the Judgment, his alimony protection would be reduced to $ 15,000 in life insurance. In the event that Jerome’s alimony obligation ended, his obligation to produce proof of life insurance or its equivalent would also end.
Jerome passed away on December 5, 2002. Patricia certified that upon his death, she contacted Metropolitan Life Insurance Company regarding the insurance and was advised that the couple’s two children, Shirley Konczyk and Dianna Robbins, had been named as beneficiaries, instead of her. She claimed that this change was made on January 3, 2001. She determined this when she made a claim for the death benefits. This was the first time she became aware that her daughters were named as the beneficiaries, rather than her.
When the post-judgment motion was originally filed, Patricia failed to provide the Court with information regarding her age, marital status or the amount of alimony owed. This information was only provided after oral argument. She contended that she received alimony through December 2002, but since January 2003, she had not received any payments. She had not remarried and was currently 63. Therefore, she would continue to receive alimony through August 2004. The Court calculated this amount would be $ 2,000 in alimony payments.
Patricia failed to produce a copy of any insurance policies regarding this motion. At oral argument, the Court learned that there was more than one policy, the combination of which would equal or exceed $ 15,000. However the court did not know the type of policy, whether there were loans against the policies or why the beneficiary was changed. At the time of oral argument, the policies had not been paid because there was an issue regarding Jerome’s cause of death.
Patricia contended that she was entitled to $ 15,000 because this was the amount of the insurance set forth in the Final Judgment of Divorce for her benefit. Shirley Konczyk and Dianna Robbins were the executrices of Jerome’s estate. The estate contended that Patricia had not shown any proof that she was the beneficiary under the policy, or that she was made the beneficiary within ninety days as required by the Final Judgment of Divorce. They believe that the Final Judgment of Divorce could also have meant that Patricia receive insurance just in the amount of alimony due to her.
Historically, and under the common law, alimony stopped when the supporting spouse died because alimony is personal to the paying spouse. This principle has eroded over the years. While New Jersey Statute 2A:34-35 states that, “alimony shall terminate upon the death of the payer spouse,” it now further provides that, “[n]othing in this Act shall be construed to prohibit a court from ordering either spouse to maintain life insurance for the protection of the former spouse or the children of the marriage in the even tof the payer spouse’s death.” There certain specific factual scenarios where an ex-spouse, who was obligated to pay alimony or child support, was required to provide insurance as a security, died, and the proceeds of the life insurance are expected to provide continued payments. However, at the time, there were no cases in New Jersey that specifically addressed the issue raised here where the supporting spouse died, alimony is to be paid for a specified timeframe and the insurance policy considerably exceeds the remaining obligation. The court relied on cases from other states for guidance. The Florida case of Sobelman Sobelman, held that life insurance can be required as a security for alimony support obligations and this amount is not necessarily limited to arrearages that are owed at death. In Younge v. Younge, the Oklahoma Supreme Court held that a spouse who was required to pay alimony for 120 months could be required to maintain life insurance for the ex-spouse’s benefit, but the lien on the insurance proceeds was not to be in excess of the alimony due and unpaid at the time of the obligor’s death.
In Konczyk v. Konczyk, the issue was that Patricia was only owed $ 2,000 in alimony yet, the policy would pay her $ 15,000. In general, an obligation to maintain insurance will not survive the satisfaction of the obligation the insurance was intended to secure. Because only $, 2,000 in alimony was due at the time of decedent’s death, Plaintiff would gain a windfall if she were to receive the full $ 15,000. Therefore, the Superior Court of New Jersey, Burlington County, awarded Patricia $ 2,000 and attorney’s fees and cost.
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