Life Insurance for Minor Children

By Attorney Gregg Herman
December 24, 2014

An unpublished, but citeable Wisconsin Court of Appeals case, released yesterday, has implications for quite a few divorce settlements.
It is common, where there are minor children, for a divorce agreement to require at least the payor of child support – and sometimes both parties – to maintain life insurance with the children as beneficiaries.

Yet sometimes, there is no termination date for this requirement in the MSA.

While logically, one would assume that it would terminate when there are no more minor children, in Tensfeldt v. Haberman, 2009 WI 77, 319 Wis. 2d 329, 768 N. W.2d 641, the Supreme Court held that a stipulation for property benefit for adult children is enforceable.

The issue then becomes whether a life insurance provision is in the nature of child support or property division.

In McDonah v. McDonah, No. 2014AP712 (released December 23, 2014), the CA held that the provision was in the nature of child support and thus ended when the children were no longer minors.

This holding makes a great deal of sense as otherwise, this requirement would go on forever.  Imagine parents in their 80s having to pay incredible premiums for life insurance for “children” in their 60s!

That being said, it is an example of sloppy drafting which occurs frequently among pro se parties and even when there are lawyers.  A well drafted MSA would consider this issue, in particular because maybe it should not terminate when the children are 18 and out of high school.  Given the failure of many people to save sufficient funds for their childrens’ college (figuring they would pay as they go), I usually recommend that this requirement continue until the children are finished with their undergraduate education or a certain age (such as 22 or 25), whichever comes first.

The primary point is that lawyers need to consider this issue and not rely on the court of appeals to bail them out.  Although the court reached the rational decision in this case, they could have used Tensfeldt to rationalize a different answer.  There is no guarantee, of course, about the next case.

Attorney Gregg Herman is a founding partner of Loeb & Herman, LLC in Milwaukee, WI. He practices family law exclusively, and can be reached via e-mail or by calling (414) 272-5632.