Can Patty Collect? Patty, who is divorced, owned a house that is titled in her n

Question

Can Patty Collect?

Patty, who is divorced, owned a house that is titled in her name alone. Although Quinn (her former spouse) was not ordered by the divorce court to provide any spousal support or alimony to Patty and she had no reasonable expectation of any benefit from the life of her former spouse, Patty applied for $500,000.00 of insurance on his life anyway, and paid the annual premium each year when it came due. Patty also purchased a fire insurance policy on her house, and paid each annual premium as it came due. Four years later, Patty sold the house in a cash sale to a non-related buyer. Two years after the sale of her home, the house was destroyed by fire. Can Patty collect the proceeds of the fire insurance policy on her former home? Why or why not? One year later, Quinn died. Can Patty obtain payment on the life insurance policy that she purchased to insure Quinn’s life? Why or why not? Explain your answers in detail.

Explanation / Answer

(a) Patty cannot collect the proceeds of the fire insurance policy on her former home. This is because home is an asset, which belongs to its current owner and only the current owner of the home or a person nominated by him or her are the beneficiary of insurance claim on it. This is irrespective of who pays the premium.

(b) Patty may obtain payment on the life insurance policy that she purchased to insure Quinn’s life. This is because divorce is the end of marriage, but not the end of marital obligations, particularly if there are children of the marriage. It creates financial obligations on both parties. Usually one spouse is the custodial parent, and the other provides for the child support. If either of the parents dies, the other has to take custody of the children and take on all the obligations formerly covered by the deceased spouse. Therefore the surviving parent needs additional financial resources to pay for the child support. This logic is applicable also, if there are no children of the marriage and the spouse only need financial support for self.

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