Associate Attorney
If you or your spouse owns a life insurance policy, it may not be on the table for equitable distribution.
In Estate of Merrill v. Merrill, 4th DCA (June 17, 2026), the Fourth District Court of Appeal reversed a trial court’s equitable distribution order in a long-running divorce case that took an unusual twist: the husband passed away before the final trial was held, and his estate was substituted as the party. The appellate court found the trial court made three distinct errors in distributing the marital estate — two involving life insurance policies and one involving a collection of sprint race cars.
Florida law defines marital assets as things acquired during the marriage that have value as of the cut-off date, which is typically the date the petition for divorce is filed. This is a hard line. If an asset has no value on that date, it cannot be divided in equitable distribution. Term life insurance policies have no cash surrender value while the insured is still alive. Unlike whole-life or universal-life policies, a term policy pays out only if the insured dies during the coverage period. Before that happens, the policy is worth nothing you can actually touch. Courts have long recognized this principle, and Merrill reaffirms it clearly: a term life insurance policy is not a marital asset because it has no value on the petition date.
The Court breaks down the errors regarding the valuation of the assets as follows:
Policy #1: The Lincoln National Policy
The wife owned a term life policy on the husband’s life. After he filed for divorce but before he died, she sold the policy for cash — a practice sometimes called a “life settlement.” The proceeds were held in the parties’ attorneys’ trust accounts pending the court’s order. The trial court treated those proceeds as a marital asset and split them equally.
The appellate court reversed.
On the petition filing date (July 19, 2019), the policy was a term policy with no cash surrender value — meaning it had no value at all. The fact that the wife later sold it for cash didn’t transform it into a marital asset, any more than selling a non-marital inheritance would make the proceeds marital property. Because the proceeds were never commingled into a joint account, they remained the wife’s non-marital property. On remand, she gets them back.
Policy #2: The Americo Life Policy
The husband owned a term policy insuring his own life, naming his two adult daughters as beneficiaries. The wife testified that the husband had promised to add her as a third beneficiary — but he never actually did it.
The trial court nonetheless ordered the policy proceeds split into thirds, reasoning that the husband’s representations created an obligation.
The appellate court reversed here too, and on two grounds. First, the same foundational rule applies: on the petition date, the husband was still alive, so the term policy had no value and was not a marital asset. Second, the wife’s promissory estoppel theory failed because she couldn’t show she had changed her position to her detriment in reliance on the husband’s promise — a required element of that claim.
The policy proceeds go to the daughters, as originally designated.
The Race Cars: A Lesson in Careful Asset Classification
The case also addressed a collection of six sprint race cars. The trial court found — correctly, based on the evidence — that five of the six cars were marital assets built during the marriage, while one (a red Kinser) was the husband’s non-marital property. But then the court ordered the sale proceeds from all six cars split equally.
That was an internal contradiction the appellate court couldn’t let stand. You can’t classify an asset as non-marital and then include it in equitable distribution. On remand, the proceeds from the red Kinser must be excluded from the split.
What This Means:
If you own term life insurance: The policy itself is very likely not a marital asset, regardless of when it was purchased during the marriage. The key question is whether it had cash value on the date the petition was filed. If not, it stays out of equitable distribution.
If your spouse owns term life insurance and named someone else as beneficiary: A promise to change that beneficiary designation — even a sincere one — doesn’t give you a legal claim to the proceeds unless the policy was actually changed. Courts will look at what the policy said, not what was said about it.
If life settlement proceeds are involved: Selling a term policy during the divorce proceedings doesn’t make those proceeds marital property if the underlying policy had no value at the petition date and the funds were never commingled.
If non-marital assets are being sold during the divorce: The non-marital character of the asset typically follows the proceeds, as long as the money isn’t mixed into joint accounts.
A Note on Complexity
Merrill is a good reminder that equitable distribution in Florida is more nuanced than a simple 50/50 split. The classification of assets as marital or non-marital — and the valuation date that controls that classification — can dramatically affect the outcome. A single term insurance policy, a sold asset, or even a verbal promise can become the center of a lengthy appellate battle if not handled correctly at the trial level.
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