Wadsworth v. Wadsworth, Court of Appeals of North Carolina, December 21, 2021 (Security For Child Support, Alimony)

The trial court entered a child support and alimony order. The order established a $1,900.00 a month, 20-year term alimony obligation; a prospective monthly child support obligation; and an $18,026.75 child support arrearage. The court ordered husband to maintain a life insurance policy with a $550,000.00 death benefit – the purpose being to secure the $18,026.75 child support arrearage and the $456,000.00 in alimony that would be paid over the total alimony term. Husband appealed.

The Court of Appeals held that the life insurance the trial court ordered husband to maintain did not properly qualify as “security” pursuant to N.C.G.S. §50-16.7(b). In support of this determination, the Court of Appeals reminded us that a supporting spouse’s legal obligation to make alimony payments terminates upon the death of the supporting spouse; receipt of a life insurance payout after the death of the spouse who was paying alimony would be the equivalent of the dependent spouse receiving additional alimony after the death of the supporting spouse.

The court also noted that the total of husband’s alimony obligation plus his child support arrearage was less than the $550,000.00 death benefit husband was ordered to maintain and noted that each month that child support arrearages and alimony were paid, the total lifetime obligation would decrease. So, if husband were to die after he paid all of the child support arrears but before he paid the last alimony payment, wife would have received nearly all of the court ordered award and then would receive that amount (and more) again after husband’s death. The court’s holding that a trial court may not order a supporting spouse to “secure” alimony payments with life insurance was based upon their determination that life insurance for ongoing payments did not qualify as “security” pursuant to N.C.G.S. §50-16.7(b), but their determination that past-due child support could not be secured by life insurance seems to be based mostly upon the mathematical explanation – i.e., that as husband makes each arrearage payment, his total past-due obligation decreases, but his life insurance obligation was static.

Notes

This does make me wonder whether if there were a case involving only child support, if only the arrearages were ordered to be secured by life insurance, and if the life insurance obligation decreased each month as arrearage payments were made so that the life support obligation was always equal to or less than the remaining arrearage owed, would that be OK?

February 9, 2022/by FamilyLaw