Dallas Fort Worth Insurance Lawyer Blog
Life Insurance lawyers need to know the statute and case law that deals with life insurance policies after a divorce. The relevant statute is Texas Family Code, Section 9.301.
To start with, a 1994 opinion from the Fort Worth Court of Appeals, says that one spouse can designate his or her estate as the beneficiary of the policy, at the expense of the other spouse, absent a showing of actual or constructive fraud. The opinion is styled, Street v. Skipper.
A 1981 opinion from the Eastland Court of Appeals says that policies may contain provisions automatically divesting a spouse of any interest in the proceeds, if the parties are “legally separated” or divorced. This opinion is styled, Pilot Life Insurance Company v. Koch. Also, according to a 1987 opinion from the 14th District Court of Appeals, the divorce decree may divest the former spouse of any right to the insurance proceeds. That opinion is styled, Novotny v. Wittner.
By the statute stated in the opening paragraph, a divorce invalidates any pre-divorce designation of the former spouse as beneficiary, unless the former spouse is predesignated. If the pre-divorce designation is invalidated, the proceeds to any alternate beneficiary or to the insured’s estate. If the insurance company pays the former spouse based on an invalidated designation, the insurance company is liable to pay the proper beneficiary.
There are always exceptions to the above. For an example, see the 2001 United States Supreme Court opinion stating the Employee Retirement Income Security Act of 1974 pre-empts the State law. The opinion is styled, Egelhoff v. Egelhoff.