Eric,
I represented a client (dependent spouse) in similar circumstances.
We agreed that the Husband would list the Wife as the beneficiary of the 401K. Husband would provide proof, on an annual basis, that she is the beneficiary of an amount necessary to secure the life insurance obligation (whatever you decide it is). We reduced the amount on an annual basis to take into account the alimony already paid by the Husband. Bear in mind that you will have to tax effect the amount the Wife would get from the 401K because she will have to pay income taxes on it. Assuming it's a 401K, there won't be a 10% penalty fee applied to the Wife's receipt of the funds in the event of the Husband's death. However, there may be estate taxes applied. To be on the safe side, I also included a provision that required the estate to pay for any estate taxes so that the Wife would receive the NET amount the parties intended. You should make that intention clear in the agreement.
I also included a provision that restrained the Husband from borrowing from the 401K for the limited duration of the alimony.
To be on the safe side, I would contact the Plan Administrator and make sure there aren't any other considerations you should take into account.
Hope this helps!
Melissa
Original Message------
Hello Listmates,
H is going to have a 12 year term alimony obligation but only has $10,000 in coverage. Due to the fact that H is a smoker, a policy to cover him is about $300 per month which seems a bit excessive. Can I require that he provide the coverage through his estate as he has a retirement plan through his employer with sufficient funds. Any suggestions would be appreciated.
Best,
Eric
Eric B. Hannum Esq.
Jackson NJ
(732)370-9596
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