Obligations to Secure Child Support w/ Life Insurance Needs to be in Settlement Agreement

Case: Patrick M. McVady v. Rebecka R. Pickett-McVady (NFP) 
by Mike Kohlhaas, Bingham Greenebaum Doll  (with thanks to Tamara McMillian)

Typically, I do not digest or distribute updates regarding Memorandum Decisions that are not for publication. However, I concluded the portion of this case dealing with life insurance was notable.

Father and Mother divorced in 2010. As part of their settlement agreement that was incorporated into their Decree, Father agreed to maintain a life insurance policy with a death benefit of $1,000,000, naming as beneficiary the Mother as trustee for the parties’ two minor children. Apparently, Father subsequently experienced a decline in his financial circumstances, and he sought to modify both his weekly child support obligation, and his obligation to pay the premiums on the life insurance policy.

At a hearing, the trial court determined it would not hear any evidence on the life insurance issue, finding that the life insurance provision of the Decree was in the nature of non-modifiable property settlement, not child support. Father appealed.

On appeal, the Indiana Court of Appeals agreed with the trial court that Father’s obligation to pay the premiums on the life insurance policy going forward was a term of property settlement, not child support. (Unfortunately, the actual text of the settlement agreement containing the life insurance provision was not recited in the opinion. The language of the opinion suggests that by agreeing to make Mother the trustee of the policy benefit, that was a transfer of property from Father to Mother.)

Evidently, out of an abundance of caution, obligations to secure child support with life insurance should be expressly recited in the settlement agreement to be in the nature of the child support, if that is the intention of the parties.

To view the text of this opinion in its entirety, click here: Patrick M. McVady v. Rebecka R. Pickett-McVady (NFP)

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The Indiana Family Law Update is a free service provided by the Matrimonial Law Group of Bingham Greenebaum Doll, LLP. While significant efforts are made to ensure an accurate summary and reproduction of each opinion, readers are advised to verify all content and analysis with a traditional case law reporter before relying on the content and analysis offered here.

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