When alimony and/or child support is at issue, Sections 61.08(3) and 61.13(1)(c) of the Florida Statutes authorize a trial court to require a party who is ordered to pay alimony and/or child support to purchase or maintain a life insurance policy to secure such an award(s).
Specifically, Section 61.08(3) of the Florida Statutes provides as follows when an award of alimony is at issue:
To the extent necessary to protect an award of alimony, the court may order any party who is ordered to pay alimony to purchase or maintain a life insurance policy or a bond, or to otherwise secure such alimony award with any other assets which may be suitable for that purpose.
Section 61.08(3), Florida Statutes (2017) (emphasis added).
When it comes to child support, Section 61.13(1)(c) of the Florida Statutes provides as follows:
To the extent necessary to protect an award of child support, the court may order the obligor to purchase or maintain a life insurance policy or a bond, or to otherwise secure the child support award with any other assets which may be suitable for that purpose.
Section 61.13(1)(c), Florida Statutes (2017) (emphasis added).
However, it is important to note that such statutory provisions are simply tools used by trial courts in certain circumstances to provide financial security to the receiving spouse after the death of the obligor spouse and such an award of security is not required or automatic. Lapham v. Lapham, 778 So. 2d 487, 489 (Fla. 5th DCA 2001) (emphasis added).
The statutes do not contemplate that a requirement for life insurance or other security is something that should be standard and customary in dissolution proceedings whenever alimony and/or child support is awarded. Ruberg v. Ruberg, 858 So. 2d 1147, 1156-57 (Fla. 2d DCA 2003).
For the trial courts to require child support and alimony awards to be secured by life insurance on the life of the obligor, there must first be evidence in the record and findings by the court as to the cost of the insurance being required in order to establish that the obligor can actually obtain and afford such insurance coverage in the first place. Alpha v. Alpha, 885 So. 2d 1023, 1033 (Fla. 5th DCA 2004). In addition, “in order to uphold requirements of life insurance as security for [such] awards, reviewing courts require that there [also] be special circumstances which justify a need for such requirements”. Id.
Although the special circumstances that would warrant such security are not defined in the statutes, the courts have defined such special circumstances to include the following:
[A] spouse potentially left in dire financial straits after the death of the obligor spouse due to age, ill health and/or lack of employment skills, [an] obligor spouse in poor health, minors living at home, supported spouse with limited earning capacity, obligor spouse in arrears on support obligations, and cases where the obligor spouse [has] agreed on the record to secure an award with a life insurance policy. …
Kotlarz v. Kotlarz, 21 So. 3d 892, 893 (Fla. 1st DCA 2009) (internal citations omitted).
The courts have also found it appropriate to use life insurance as security where “the recipient spouse is disabled, elderly, or has such limited employment skills that the death of the former spouse would cause the survivor to depend upon [the] welfare or the generosity of others”. Lapham, 778 So. 2d at 489 (internal citations omitted).
The amount of insurance must also be related to the extent of the obligation being secured. Burnham v. Burnham, 884 So. 2d 390, 392 (Fla. 2d DCA 2004) (citing Zangari v. Cunningham, 839 So. 2d 918, 920 (Fla. 2d DCA 2003)). The trial court may not require excessive security. The amount of security must be appropriately tailored to the obligation being secured. Hence, an imposition of a lien on pre-marital real property valued at over a million dollars to secure an award of $100,000 plus permanent periodic alimony was found to be an abuse of the trial court’s discretion. MacKoul v. MacKoul, 32 So. 3d 741, 742 (Fla. 1st DCA 2010) (quoting Watford v. Watford, 605 So. 2d 1313, 1315 (Fla. 4th DCA 1992)). At the same time, when life insurance will be required to secure an award of both alimony and child support, the trial court must then allocate the amount of life insurance designated to secure the alimony award vis-à-vis the amount designated to secure the child support award. Gordon v. Gordon, 63 So. 3d 824, 827 (Fla. 5th DCA 2011). Additionally, the life insurance securing the child support award must also be designated as being for the benefit of the child(ren). Id. (internal citations omitted).
It is also important to note that when life insurance is considered as security for alimony and/or child support award, any final judgment on this matter must specify “whether [such] insurance is [actually] security for unpaid support obligations, in which case only a portion of the proceeds might be encumbered, or whether all the insurance proceeds are to be distributed to the beneficiaries upon the spouse’s death to minimize economic harm to the family.” Smith v. Smith, 912 So. 2d 702, 705 (Fla. 2d DCA 2005) (internal citations omitted).
This all means that in the absence of such special circumstances, a spouse cannot be required to maintain life insurance for the purposes of securing an alimony and/or a child support obligation. For example, a spouse would not be required to secure an alimony payment obligation with life insurance where the receiving spouse has received a large equitable distribution award and was able to work to support herself, as these two findings do not support a conclusion that the former wife would face dire economic circumstances if the former husband died. Sweeny v. Sweeny, 113 So. 3d 987, 989 (Fla. 5th DCA 2013).
Consequently, if alimony and/or child support are possible issues in your case, the trial court’s ability to require security for either an alimony or a child support obligation should not be overlooked by either spouse. The obligor spouse should be well aware that such a requirement is not mandated but “rather, it is justified only if there is a demonstrated need to protect the [recipient spouse].” Gilliard v. Gilliard, 162 So. 3d 1147, 1155 (Fla. 5th DCA 2015) (internal citations omitted). As to the recipient spouse who is looking for some sort of security for an alimony and/or child support award, that recipient spouse must recognize that such security is not a given but, instead, is awarded only upon a showing of special circumstances sufficient to warrant an order requiring the obligor spouse to secure an alimony and/or a child support obligation with life insurance or other form of security.