Alabama Divorce Can Impact Property and Insurance Coverage

When a couple divorces, trying to disentangle their lives from one another can seem an almost insurmountable task. Many aspects of people’s financial situations change after divorce, and they have to learn how to survive financially as single people, which can raise issues they may have not had to consider before. In many cases, spouses cannot agree on how to split up all of the things they have collected over the course of the marriage. When they cannot divide things in a manner suitable to both parties, the court must step in and do it for them. People in Alabama should understand how courts divide property in divorces and how divorce may impact insurance matters.

Equitable Division of Property

Alabama is an equitable division state, meaning that the court will divide marital property in the way that it believes is most fair, rather than simply splitting marital property evenly.

The court first determines categorizes the couple’s possessions into marital and non-marital property. Non-marital property is property that a spouse had before the marriage, or gifts and inheritances that either spouse received individually during the marriage. However, if a spouse used a gift or inheritance to benefit both parties as a couple, then the court may consider that marital property.

Marital property is all income either party earned during the marriage, as well as assets purchased with income a spouse earned during the marriage. Vested and non-vested rights in retirement or pension plans are also marital property. The appreciation in value of non-marital property might also be classified as marital property if either spouse contributed effort or marital assets to increase the value of the property.

Property Division Factors

The court then divides marital property based on the following factors:

• The contribution of each spouse to the marriage, including homemaking
• Each party’s economic circumstances
• How long the marriage lasted
• Whether either spouse interrupted his or her career or education for the benefit of the marriage
• The desirability of keeping an asset intact and free from one spouse’s control, such as a business
• Each spouse’s contribution of income to the marriage and incurrence of liabilities
• The desirability of keeping the marital home for a minor child’s residence, if one parent can afford to do so
• Any other factors the court deems relevant

The court may also consider fault when making property distributions.

Insurance

Divorce property settlements may also raise a lot of questions about insurance coverage. Health insurance is a major concern for many people. Those who had coverage through their ex-spouses will need to investigate whether they may remain on their ex-spouses’ plans and how much that will cost. If they may not do so, they will have to consider whether exercising COBRA rights or seeking alternative health insurance is more cost-effective.

People will also need to reassess their life insurance needs after divorce. Some parents may be required to have more life insurance as a part of their child support obligations. Spouses may also need to be released from any current life insurance policy riders that they hold on their spouses’ policies in order to purchase different insurance.

Home and auto insurance rates often drop after a divorce, since the policies no longer insure as many people or possessions. People need to make sure to tell their insurance agents of the changes.

Speak With an Attorney

Divorce property settlements are highly fact-specific matters and can vary widely based on the unique circumstances of each couple. If you have questions about property division in Alabama, consult a seasoned property division attorney who can offer you guidance.