Life Insurance and Divorce with Grace C. Roessler, Esq.

On this episode of We Chat Divorce we welcomed Grace C. Roessler, Esq. Grace is an associate at Mirick O’Connell’s Family Law and Divorce Group in Boston. She concentrates her practice in the areas of divorce and family litigation, including pursuing and defending the following actions: divorce, custody, child support, modification, contempt, request to permanently remove children out of the Commonwealth, paternity, restraining orders, department of children and family investigations, and elder divorce. In short, Grace is a busy person.

She has experience serving as a third-party neutral including court-appointed discovery master and is a certified mediator. While she aims to settle cases amicably and efficiently, including attending voluntary mediation or conciliation, Grace is prepared to litigate the matter in the best interest of the client.

She regularly appears before probate and family court judges, promotions, and trials to litigate on behalf of her clients. She volunteers for the Middlesex Probate and Family Court lawyer for the day program, is an active member and contributor to the Boston Bar Association, and serves as co-chair of the Boston Bar Association Family Newsletter.

Grace was selected by her peers for inclusion in The Best Lawyers in America: Ones to Watch© 2021 and The Best Lawyers in New England: Ones to Watch© 2021 in the field of Family Law.  In 2019 and 2020, Boston Magazine and Law & Politics named Grace a Massachusetts “Rising Star.”

Prior to joining Mirick O’Connell, Grace was an associate at the firm of Brick, Sugarman, Jones & McBrien, LLP. Here are her Bar & Court Admissions:

• Massachusetts
• Wisconsin
• Certified Mediator

Hosts, Karen, and Catherine sit down with Grace Roessler to discuss how to navigate life insurance during divorce.

Learn More >> https://www.mirickoconnell.com/grace-c-roessler

Connect with Grace on LinkedIn >> @Grace Roessler

Karen:

Welcome to We Chat Divorce. [Catherine] and I are honored to welcome attorney Grace Roessler to our podcast. Hello, Grace.

Grace Roessler:

Hello.

Karen:

In this episode, we’re going to discuss the different roles life insurance plays in a divorce. But first, let me take just a couple of minutes to introduce Grace. Grace is an associate at Mirick O’Connell’s Family Law and Divorce Group in Boston. She concentrates her practice in the areas of divorce and family litigation, including pursuing and defending the following actions: divorce, custody, child support, modification, contempt, request to permanently remove children out of the Commonwealth, paternity, restraining orders, department of children and family investigations, and elder divorce. Grace is a busy person. She has experience serving as a third-party neutral including court-appointed discovery master and is a certified mediator. While she aims to settle cases amicably and efficiently, including attending voluntary mediation or conciliation, Grace is prepared to litigate the matter in the best interest of the client.

Karen:

Grace regularly appears before probate and family court judges, promotions, and trials to litigate on behalf of her clients. She volunteers for the Middlesex probate and family court lawyer for the day program, is an active member and contributor to the Boston Bar Association, and serves as co-chair of the Boston Bar Association Family Newsletter. Look for more of Grace’s credentials and the bio attached to this podcast. It’s quite impressive. Welcome, Grace.

Grace Roessler:

Thank you very much. Thank you for having me.

Catherine:

Holy cow. That’s awesome. Well, life insurance and divorce. That’s a topic rarely discussed, and I’m really excited to have you on today and talk to us about it. So let’s start by discussing life insurance and why it’s so important not to overlook it in divorce. And then let’s end our conversation today and talk about what are some options available if life insurance is not accessible to people if they’re in divorce, if they can’t qualify for it.

Grace Roessler:

Absolutely. Absolutely. So the life insurance with respect to divorce, a lot of the time, it is essentially there or ordered to be in effect in order to make sure that a surviving spouse and any children are financially taken care of in the event that the family member who is currently paying child support or an alimony award predeceases the end of their obligation. And so that’s probably one of the main reasons why life insurance becomes part of your separation agreement in a divorce.

Catherine:

Yeah. So a lot of people have whole life policies or they have term policies, and they don’t understand the difference between the two.

Grace Roessler:

Right. And so the whole life policy carries with it… Obviously there is some kind of a cash benefit if the individual that’s holding the policy were to die, but the whole life policy also carries with it a cash value that’s associated with it. And that’s something that we always ask people to put on their financial statements as well because it is actually a marital asset. The term policies do not, and the term policies end at certain periods of time. And so when you have a term policy, you might have to renew it as part of your divorce agreement or it’s something to consider when you are crafting life insurance provisions, to make sure that if you know that a term policy is ending in say the next year or two, that part of the language that you have in your separation agreement is to ensure that that coverage continues or that it’s renewed for another period of time.

Karen:

So I believe we come across a lot of agreements that say they’re supposed to produce the policy to make sure it’s in full force and effect. I doubt a lot of people do that, but are there other provisions or language that could be an agreement that would help to keep that policy in full force and effect without having to track down those statements?

Grace Roessler:

Yeah. I think there are a few ways that I usually deal with that in my separation agreements. The first is actually, yes, you can certainly put the person that’s holding the policy in charge of pursuing or making sure that you’re providing that information to the other parent at least once a year.

Grace Roessler:

But another good way to check in on that is actually to make sure that the other person contacts the provider every year or every quarter and makes sure that it is in effect. It’s ironic that if you’re the person that has the policy in your benefit, yes, once a year, you’re supposed to go give it to the other side, but there’s a good chance that the other side should be the person coming after you to make sure. I think it’s really important for people to follow up on those provisions in their separation agreements. And I agree with you that doesn’t always happen. And what you don’t want to happen is for that life insurance policy to not be in existence when it should have been or in the event that someone untimely passes.

Catherine:

So let me clarify what you’re saying. So if I’m receiving support from my ex-spouse and I’m the beneficiary on his life insurance policy, you’re saying that it’s my responsibility or I should take ownership in going to, let’s say MetLife to get the proof that I’m still the beneficiary. So will MetLife really give me that proof just as the beneficiary or do I have to be listed as the owner on that policy, or do I have to bring my divorce decree stating that I’m entitled to get that information?

Grace Roessler:

Right. So I guess two answers to that. You certainly can be the listed owner of the policy and make sure that your ex-spouse is the one paying for the policy. That is one way to ensure that a policy will exist. In terms of getting that proof, generally speaking, no, MetLife would not necessarily give you the proof of the policy. But in that situation. And in my case, what I normally do is notify the carrier of the person that has the policy, give them some kind of letter that says, “As you know, per our separation agreement, you are supposed to carry this life insurance policy. Please give me a most recent copy of the policy existence and the beneficiary determination page so that I can confirm and keep it in my records.” And if that person doesn’t respond to you within a week or two, I always recommend to clients that we need to file a complaint for contempt because you don’t want that policy to lapse.

Grace Roessler:

If it has lapsed, the other person might have to go back to the drawing board to obtain an entirely new policy, which does take a while, especially in COVID where the physicals that are associated with that life insurance policy are hard to schedule. There’s just a backlog of people, since they weren’t doing in-home visits for a period of months. So I always say you should file the contempt. You can always withdraw it once you are in receipt of proof of that insurance policy and the correct beneficiary designation, but it is totally worth it to make sure that you have that on the books, to make sure that it’s there.

Catherine:

Can you put language in the agreements to read that if a policy lapsed that I would have the right to sue his estate?

Grace Roessler:

Yes, absolutely. And in those situations, it would be what we call a complaint in equity against the estate because technically, if the other person is deceased, you’re not going to file that complaint under your divorce agreement docket number. It would get a new docket number with the probate and family court and you would be suing the estate. And as part of that… And I always put that language in there, that if you fail to have that life insurance policy at the time that you die, and if it was supposed to be intact, that your ex-spouse could come after your estate.

Grace Roessler:

The interesting part about that is sometimes there is an estate to be had, and that’s when the parties will fight or their estate will fight with you about what is left and what you should have received. In some cases, there won’t be much of an estate left, and that’s where people are really left with not much. And again, that’s why it’s so important to make sure that that life insurance policy is intact, to do the check-in once a year because you could be very left with a situation where the estate is maybe only a vehicle and a few thousand dollars in cash, depending upon how the person lived their life. So you just never know what’s going to be left over.

Karen:

So are there times when it’s just better to pay that policy yourself or have that… It seems like that would just cut to the chase. And I know financial wherewithal would factor into that, but-

Grace Roessler:

Yeah. I think that sometimes it is better, especially if you’ve been married to them, you know what their habits are, if they’re not really reliable, or if they haven’t necessarily spent money wisely during the course of your marriage. You can bet that that person’s probably going to continue those same bad habits. And so I agree. I think in some instances, if you have the financial capability to take the life insurance policy out on the person, you should. I think that there should still be some consideration for having to do that.

Grace Roessler:

So one way that I have done it in the past is we can calculate how much the premiums are on that policy every year for duration of the life insurance term or how long the policy is supposed to be in place and we can cut that out of the other person’s share of the assets. So essentially, they have prepaid you for the premium cost for the entire amount of time that the policy is supposed to be in place, and that person has prepaid you from his or her assets that are being divided at the divorce. So it’s a very clean break.

Catherine:

Yeah. So the best way to control the policy is to become the owner because the owner is the one who gets all the notifications and can change anything on the policy. The insured is just the insured. The owner is the one who has the control over it. So I always recommend you being the owner of the policy, but you also can buy paid-up policies. It’s just we always hear a lot of attorneys say, “You can’t make them get a policy if they don’t already have a policy in place.” So I like hearing this version of it, except that there’s support for… Even with equitable distribution, sometimes it takes a while to get your assets divided. I mean, I don’t see a lot of policies being put in place if they’re not in place, Karen, do you know?

Karen:

No. As a matter of fact, when we ask about that, we usually get shut down. To your point, you can’t force them to purchase a policy. You have to use the coverage already in existence.

Grace Roessler:

I think to some extent, it’s true that if you are doing an agreement and it is agreed upon by the parties, I don’t think that you can force people to do that. I think a judge has the authority to issue that kind of an order. And if you continue to bring this up at a pretrial conference or at a trial, I think that the judge certainly has the ability, and in my experience, has ordered individuals to either obtain life insurance and/or obtain additional life insurance to supplement whatever their employer-sponsored policy is or a temporary policy is, especially if we know that temporaries might expire in a year or two or three after a divorce.

Grace Roessler:

All of that information certainly would be presented to the judge at a trial for the judge to be able to order that because it is a form of security and the courts are certainly going to care about that security, especially if you have young children. If you have a five-year-old or a six-year-old or a seven-year-old, you’ve got 20-some years 19 years worth of support that you would be paying. And if you die three years or four years after that judgment, that is a whole lot of money that the surviving parent is short that you would have paid. You would have paid that as part of the child support order. Most of that money probably could have also gone to college. And so I think the judges are very… especially in light of COVID where we just don’t know what’s going to happen to people’s health if they do get sick, I think the courts are very aware of the need for the security blanket, if you will, for the life insurance.

Catherine:

A lot of times, it should be pointed out, in insurance policies, if you don’t change the beneficiary, they’re irrevocable. So even though your divorce order might state that you’re the beneficiary, if your actual policy states that somebody else is the beneficiary, what are the chances of it reverting back to you?

Grace Roessler:

I’ll tell you that the answer is a court has to order it. And so I’ve been on all three sides of that equation. I have represented the insurance company, and I have to tell you, they are neutral in that. Most of the time, the insurance companies are able to get out of a case by simply being able to agree that whatever the court decides, we will implement, because the insurance company does not want to be involved in this battle. On its surface, though, they will do exactly what that beneficiary designation says. So unless it’s altered by the court, you’re right. They’re going to just stick to their guns and say, “This is what it said.” It really does. It takes a court to be able to alter that determination.

Grace Roessler:

And I’ve been successful in doing that by proving that someone had this obligation to their first spouse. They clearly willfully did not put their first spouse on as the designee. The second spouse received all 500-some million-some. And to show why that was inappropriate, and to show that there might be still minor children here, or the person had an alimony obligation that was still not fulfilled.

Grace Roessler:

And that is a contract. And so under contract law, that individual breached their own contract. And therefore, as a result, the court is able to come in and swipe that money for whatever was due for that ex-spouse at the time of death. But it takes an equity action. It takes a court action to do that, which can be expensive, which is another reason why in terms of avoiding these kinds of issues, that’s why either, as you said, owning the policy yourself to make sure that it’s intact, or regularly checking in with your ex-spouse every year to make sure it’s intact because on the backend, it’s a lot of work to try to get the money back once it’s been either distributed or once the person dies.

Karen:

Yeah. Can you imagine being a spouse and not knowing that that other obligation existed? That would be insane.

Grace Roessler:

When people come to me for let’s say a modification… maybe it’s a child support modification; maybe it’s a contempt… one of the first things I actually look at in their agreement is whether or not there’s a life insurance obligation. I just did it yesterday. And I say before I take the client, before I file anything with this new action, I look at that and I ask them, “I see you have a life insurance policy you’re obligated to have. Do you still have it? Let me see it. I want to see it.” Because every time that you reentered the court system, you’re going to be looked at again for everything that you’re doing under this contract. And that life insurance policy, that’s going to be raised no matter what you file. It will be raised. And it’s very important to still have it in place.

Karen:

Yeah. Incredible.

Catherine:

I’m so glad that you’re so upfront with everyone or with your client, and you set it out there. You set out there for them so there’s no running around. There’s no trying to get around it. It just sets out the intention so that if they want to try to get around it, they’re the ones that are hurting themselves.

Grace Roessler:

That’s right.

Catherine:

You have an obligation. I always say if people would just know you’re getting married, if you get divorced, this is what it is, just bite the bullet and move on.

Grace Roessler:

Right. Yeah. And I think to that extent, the life insurance provisions, it’s usually later in the separation agreement. It’s exhibit E, it’s D, it’s F. It’s somewhere in the back. And it really should be A. It should be right there in the front because it is your protection. It is the backup plan. And so much of what we do is what is the consequence of X, Y, Z? And the consequence of not having this life insurance policy in place is really disastrous for a child, for the ex-spouse. That’s still left holding the bag, trying to either help themselves or raise a child. It’s just the impact is so great that it really should be top-of-mind for anybody who is either thinking about going back into litigation, or as I said, on a yearly basis, doing that check-in to make sure it exists because you’re going to need it. It’s expensive to live, and there’s a reason that you negotiated for it in the first place.

Catherine:

It’s changed the dialogue, changed this from an emotional conversation to a factual one. And then is, “Why did we acquire this life insurance?” Even when we compile people’s portraits and we bring up the life insurance, “Well, we’re not keeping that because if anything happens to me, my ex’s boyfriend or girlfriend is not getting that money. Or if anything happens to me, my kids are getting enough money that they don’t need this money.” And it’s even when people are married and why they don’t buy life insurance. “If anything happens to me, my kids will have enough insurance.” But what they’re not doing is really doing the number-crunching and realizing that they’re buying pennies on the dollars when they’re buying life insurance. And they’re not [crosstalk] the real cost for what your estate’s really going to be worth and why you have in place. And that’s the conversation that needs to be had.

Grace Roessler:

Right. If I could just share, I had a case a couple of years back where I had represented a woman in her paternity suit, and then I represented her in a contempt. She had asked her ex for proof of the life insurance policy. And a few weeks went by. He hadn’t responded. And so I told her, “We need to file a contempt just to make sure.” At the time, they had a little daughter who was three and he was supposed to carry a $300,000 life insurance policy. We ended up taking him to court. He was found in contempt. The judge gave him 30 days to get a new life insurance policy because he had, in fact, allowed the other one to lapse. And we came back to court. He had the life insurance policy, 300,000. Everything was fine.

Grace Roessler:

A few months later, he died. He died of cancer. It was very quick. He was young. He was a professional. You never would have known, but it happened. And if it hadn’t been for filing that initial contempt and following through and spending the $2,000 in legal fees to make sure that it existed, she would never have had the $300,000 that she received from the life insurance policy, which I can tell you has now grown to almost $500,000 in the last seven years, 10 years since we’ve had this action, and her little girl is going to be able to go to college with that money. And that’s something you don’t always think about at the time, but that’s really what this is about, is planning ahead into the future so that you’re not the only one that’s financial responsible and that your ex-spouse in his or her own way continues to support your child or you depending upon what you negotiated.

Catherine:

Yeah. That’s life-changing.

Karen:

Absolutely. So what about if a person’s not insurable?

Grace Roessler:

There have been cases where people aren’t insurable. If you’ve had certain types of cancer, some mental health diagnoses. The insurance companies shy away from depression, history of depression, that kind of thing. I think in years to come, there won’t be as much of an issue with that. But for now, there is. And so one of the other things that we can bargain for is to be beneficiary of existing assets. So if you have a retirement account, that you still remain the beneficiary of the retirement account. If you have a home, you could put the home in trust and be the beneficiary of the trust on the home. Those are things that exist already. You don’t have to pay for them per se, but it’s an additional safety net, and sometimes it’s easier for people to do that. And there’s no premium associated with that particularly, so it’s also a cheaper option for people that if you use your existing assets, you can figure out what’s there and be able to save those for the ex-spouse.

Catherine:

That’s a great idea. And also, if you’re listening and you have current term renewable and convertible policies, we see them when they come in with our portrait, we look at the dates, and some of them are convertible to whole life policies without proving insurability. So even though you’re going through a divorce, you might want to call your insurance agent and have that converted now to a permanent policy.

Grace Roessler:

That’s a great idea. I just got the envelope for one of my own, actually. Yeah. But yeah, it happens, and it’s a good thing. [crosstalk] good record with your current insurer, they’ll do that for you. So you can always ask too. Divorce is hard to talk about sometimes, but it’s better for more professional people in your life to know what you’re going through so that if you have that conversation with your insurance broker, they also still might be able to help you. I think that it’s time to get creative with your solutions, and that’s one thing that I like to pride myself on is just trying to be creative with what we can do for someone.

Catherine:

Absolutely. Three minds are always better than one.

Grace Roessler:

Absolutely.

Karen:

So do you have any other final tips for people as it relates to life insurance before we conclude?

Grace Roessler:

Like I said, my only other tip is if it seems like you’re not getting a response from your ex-spouse, that’s usually not a good sign and you should not be afraid to take quick action to go to court to fix it, because generally, people do cure the issue before you have a hearing, and that’s the entire point of filing anything. It’s not to get even. It’s not to spend a ton of money. It’s to fix a problem and to make sure that everyone is doing what they’re supposed to do. And so I guess my final tip is don’t ever be afraid to make that first step of filing something about life insurance because if you’re looking at trying to save a $300,000 policy or a $500,000 policy, in the long run, if you file a contempt and you spend a grand or two on that issue, it is still completely worth it to make sure that that policy exists.

Karen:

Yeah. I agree. Yeah. So all of you out there who’ve been divorced and you’re still receiving some type of payments or whatever from your spouse, check your agreement. If there’s life insurance obligations, make sure you have yourself protected. That’s incredibly valuable. Well, Grace, thank you so much for being with us today. This concludes this episode on the many roles life insurance plays in the divorce process. Thank you for a great conversation.

Grace Roessler:

You’re very welcome. Thank you very much for inviting me on. And I hope that everyone learned a little something this afternoon.

Catherine:

Thank you, Grace.

Karen:

[crosstalk] did.

Grace Roessler:

Thank you.