Most people receive maintenance because they cannot otherwise afford the standard of living they became accustomed to during their marriage. This may mean the person receiving support is in school, or going through employment training, or otherwise trying to become self-supporting. Most maintenance awards are for a period of time, and then they either terminate on their own terms or terminate after a hearing. With child support, the support is being paid so that the minor children are able to afford their necessary living expenses despite the fact that their parents do not live under the same roof. So, many people wonder what will happen if the person responsible for paying support unexpectedly passes away.
In most cases where parties are of means, child support and maintenance awards are secured by a life insurance policy. The life insurance policy, usually, must be of a certain aggregate value upon death of the person paying support. This life insurance policy works to secure the support payments so that if the payor unexpectedly passes away, the parties receiving support will still receive some assistance. Child support is much more frequently secured with a life insurance policy than maintenance, but maintenance has become more and more common. Both are typically secured by a life insurance policy in a case where a paying party has means to do same.
The next question often becomes, what happens if the life insurance policy becomes encumbered by a loan or otherwise is diminished? Oftentimes an order or judgment securing child support or maintenance by a life insurance policy will prohibit the paying party from encumbering the life insurance policy or taking out loans against it. However, it is also helpful to have language in the document stating that if the payor is found to have diminished the aggregate proceeds of the policy upon death, that there is a lien against their estate for the difference between what is paid out from the policy and what is not. This language in no way guarantees that a party receiving support would have recourse, as there may be other secured debts liened against the decedent’s estate, but in some scenarios it can protect the party receiving support.