The Northern District of Texas, Dallas Division ruled on an interpleader case recently. It is styled, Primerica Life Insurance Company v. Sherry Purselley, et al.
The co-defendants in this case are Henslee, Lee, and Sherry Purselley. This is an effort to determine who owns the life insurance proceeds at issue.
Lee purchased the Policy and he was owner with Sherry the primary beneficiary. Later, Lee executed a Change Form that designated Sherry the Policy owner in 1992. She thus, became the new owner.
Less than a year later, in 1993, Sherry and Lee divorced. The divorce decree that allocated Lee “any and all policies of life insurance in his name,” and to Sherry “any and all policies of life insurance in her name.” Sherry made payments on the Policy until Lee died. Sherry filed a claim as the owner and beneficiary and Primerica learned for the first time of the divorce. The children were notified of their status as secondary beneficiaries, who then filed a claim for benefits. As a result, Primerica filed this interpleader action and was later dismissed by the Court.
In an interpleader action, each claimant must prove his or her right to the fund by a preponderance of evidence.
Sherry contends she is the owner and primary beneficiary of the policy after the 1992 transfer of ownership, and her ownership survived the 1993 divorce.
Sherry contends the change form shows Lee’s intent to transfer all of his interest in the policy to Sherry’s separate estate. The form states that Lee is “transferring ownership of said Policy, along with all right, title, and interest in said Policy to Sherry Keeton Purselly.
The Court discussed how the transfer of ownership was clear and ruled in favor of Sherry as to ownership.
The kids next contend that regardless of Sherry’s ownership interest in the Policy, the Texas Family Code, Section 9.301(a), prohibits Sherry from being the Policy’s primary beneficiary.
The Court holds that under the plain language of the Family Code and the relevant case of the Family Code do not apply here. The language in Section 9.301(a) assumes that an insured has designated the insured’s spouse as a beneficiary under a life insurance policy, not, as here, that the insured has gifted ownership of the policy to the other spouse. One of the statutory exceptions, Section 9.301(a)(2), likewise assumes that the insured spouse had retained ownership of the policy when re-designating a former spouse as beneficiary.
The statute has only been applied to situations in which the insured retains some ownership of the policy and therefore has the authority to designate the beneficiary.
The Family Code does not provide the authority to alter the separate property rights of two spouses. It provides only for the division of “the estate of the parties,” also referred to as community property in Section 7.001.
Sherry prevailed in the cross motions for summary judgment.