The press has made a somewhat big hullabaloo over a life insurance policy purchased by Joe Simpson on the life of his daughter Jessica. Joe is now finalizing a Texas divorce with his soon-to-be former spouse, Tina Simpson. The divorce action was filed by Tina in a Texas court in Sept. 2012.
The latest headlines regarding the life insurance policy are that Joe will split ownership equally with Tina. He reportedly had purchased the policy secretly and had been trying to keep it that way, but now must share it. In fact, the couple recently settled all of their property division issues by essentially agreeing to divide everything equally. The cost and benefits of the life insurance policy will be shared.
It appears that this is a whole-life policy, with probable cash-value benefits, purchased on Jessica’s life. Its reported value is $4.5 million. Because a daughter is more likely to survive her parents, it appears that the death benefit payable at Jessica’s death is not its main attraction. Furthermore, in the relative scheme of things, the policy value is somewhat small in comparison to the couple’s income and assets generated from managing Jessica’s affairs.
It may be that the policy is fully paid and Joe was holding it for access to cash if needed. There may also be tax benefits that made it attractive. Without a peek into the couple’s investment planning, however, the reasons remain largely unknown. Some of the more lurid publications seem to have jumped on it for its gossip and shock value.
Their property division agreement has Joe keeping his personal belongings, bank accounts and half of a home in Sherman Oaks. He also retains stocks and two Mercedes automobiles. Tina will retain the Waco house, two vehicles and over ten bank accounts.
The couple was able to avoid a bitter public battle by coming to an amicable divorce settlement. In Texas and elsewhere, it’s always preferable that the parties to a divorce negotiate a mutually acceptable property division agreement. This not only saves mileage on their emotional lives but also likely means substantial savings in fees and expenses by avoiding a trial.
Source: Insurance News Report, “Life insurance on Jessica Simpson split between divorcing parents,” Julie Campbell, April 29, 2013