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If you and your spouse are negotiating, you should both agree to provide life insurance for the benefit of your children (assuming child support otherwise ceases upon the paying spouse's death). The parent who is paying child support should provide enough to cover his or her support obligation, which means that each year, he or she can reduce the proceeds (remember, child support usually ends when the child turns 18 or 21). The amount should include the paying parent's share of college as well. |
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The parent who is not paying child support should also maintain coverage, if he or she can afford to do so, to help with college. |
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Who should the beneficiary of the life insurance be? This is an emotionally charged issue, but it doesn't have to be. Some people set up convoluted trusts, whereas others insist on leaving the proceeds to their three-year-old. Neither solution is usually satisfactory. |
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There are two sensible solutions. If your children are young, name your former spouse as beneficiary and hope he or she will use the money to care for your child. If the children are older, you can make them the beneficiaries, but you still have to hope that the children are taken care of. You can, of course, name a relative, but we don't recommend that. Your ex-spouse may, justifiably, express doubt as to whether the relative will ever use the money for the children at all. |
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For the very rich, trusts and trustees may be warranted. For the rest of us, just plain trustin the other spouseis best. |
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