Facts: When the parents of two children divorced, their agreed parenting plan required both parents to maintain life insurance of $300,000 with the other parent as the trustee to benefit the children as long as a child support obligation existed. At the time, Father’s expected child support obligation throughout his children’s minority totaled $297,600.

Two years later, Father married Stepmother.

Two years after that, the parents modified their parenting plan by agreement and reaffirmed the requirement that each maintain life insurance of $300,000 “until the child support obligation has been completed.”

The following year, Father designated Stepmother as the beneficiary of his life insurance policy.

Three years later, the parents again modified their parenting plan by agreement and again reaffirmed the requirement that each maintain $300,000 of life insurance to benefit the children “until the child support obligation has been completed.”

The following year, Father died when the children were ages 11 and 13. At the time of Father’s death, he maintained a life insurance policy for $500,000 with Stepmother listed as the beneficiary.

His remaining child support obligation totaled $43,760.

Mother sued to establish a constructive trust over $300,000 of Father’s life insurance proceeds.

Stepmother conceded the children had a vested interest in Father’s life insurance proceeds.

The trial court awarded Mother the life insurance proceeds equal to Father’s child support obligation, i.e., $43,760, instead of the $300,000 required by the agreed parenting plan.

Mother appealed.

On Appeal: The Court of Appeals modified the trial court’s judgment.

An agreed parenting plan is a binding contract between the parents.

Tennessee law requires that contracts be interpreted to give effect to the intent of the parties. Courts first look to the plain meaning of the words in the document to ascertain the parties’ intent.

If the language is clear and unambiguous, the literal meaning controls the outcome of the dispute. Contractual language is ambiguous only when it is of uncertain meaning and may fairly be understood in more ways than one.

The Court found the parenting plan did not limit the life insurance benefit to only Father’s outstanding child support obligation:

[Stepmother] argues that the total amount of remaining child support when the initial [] parenting plan was entered into totaled close to $300,000. However, that amount had not been changed or lowered to correlate to the remaining child support in any subsequent [parenting] plan. We note that Father’s child support obligation was $547 per month in the [most recent] parenting plan. When the [most recent] plan was developed, the children were ages 12 and 10. At the time, Father’s remaining child support obligation would have been substantially less than the agreed-upon $300,000 life insurance policy provision, supporting that the life insurance provision was not meant solely to secure the remaining child support obligation.

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Neither plan provided that the life insurance benefits were intended to secure only the amount of the remaining child support obligation. The reference to child support in the provision at issue only provided a timeframe for which the parents were to continue the life insurance requirement.

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[W]e simply hold that the most recent permanent parenting plan, which the parties agreed on appeal was controlling in this case, does not limit the children’s life insurance proceeds to only the amount of Father’s outstanding child support obligation. If the parents intended for the life insurance policy to secure only the child support obligation still owed at Father’s death, the parties could have easily stated that in the plan. By limiting the children’s proceeds from the life insurance policy, the trial court was reading into the provision what simply was not there. We must give effect to the literal meaning of the clear and unambiguous language of the life insurance provision of the parenting plan. The judgment is modified so that the children are entitled to $300,000 of the life insurance proceeds as required by the agreed permanent parenting plan.

The trial court’s judgment was modified. Mother was not awarded her attorney’s fees at trial or on appeal.

K.O.’s Comment: Parents and family-law attorneys often overlook the Social Security survivor’s benefit that enures to a child’s benefit when their parent dies. If the survivor’s benefit exceeds the child support obligation, life insurance is not necessary to secure the payment of child support. Parents may still choose to maintain life insurance to help with college expenses and whatnot, but it isn’t needed to secure the payment of child support.

McGrath v. Hester (Tennessee Court of Appeals, Middle Section, April 14, 2021).

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