Automatic Orders are not all the same
When a party commences an action for a divorce action, in addition to the summons with notice, the party must also serve a notice of Automatic Restraining Orders. These Orders direct both parties that they are restrained from depleting or transferring assets until the divorce action has been completed.
In the Order, there are explicit directives regarding real property, personal property, stocks and mutual funds, bank account, and retirement accounts. Also, the Order restrains the parties from incurring debt, such as lines of credit and cash advances on credit cards. The parties are also restrained from canceling existing health, auto, homeowners and life insurance policies that are in effect as of the time of the commencement of divorce.
But, what happens when a life insurance policy is a whole life policy and is being used as a savings plan? Should a party who is paying the premiums be bound to continue to pay for that policy if the parties also had a term life insurance policy which would protect the other one in case of death?
The Appellate Division, Second Department recently affirmed the lower court's decision, finding that since the parties had term life insurance in the event of their death, and since the parties had agreed that the whole life policy was a "savings plan", the Court found that the parties were not restrained from cancelling the existing whole life policy under the Automatic Orders.
