Life Insurance and divorce have to be reconciled when an insured dies. There are many issues that arise in these situations. Here is a 2023 opinion from the Eastern District of Texas, Sherman Division that is a necessary read for any attorney handling life insurance cases wherein an insured dies after a divorce. The opinion is styled, Transamerica Life Insurance Company v. Holly L Moore and Jeffrey H. Simpson.
This is an interpleader action wherein Transamerica owed money after an insured died but was uncertain to whom the money should be paid. The competing claimants are Moore and Simpson.
In February 2018, the Decedent purchased the policy at issue. At the time that he purchased the Policy, the Decedent identified himself as single, and he was engaged to marry Moore later that fall. The Decedent designated Moore, his then-fiancée, as the primary beneficiary of the Policy and Simpson, his father, as the Policy’s contingent beneficiary.
The Decedent and Moore were married in September 2018—over six months after the Policy to was issued. During their marriage, the Decedent did not change his designation of Moore as the primary beneficiary of the Policy, nor did he re-designate her as the primary beneficiary after she became his wife.
In January 2021, the Decedent and Moore divorced. Their divorce decree, allocated to Decedent “all policies of life insurance (including cash values)” insuring his life and to Moore “all polices of insurance (including cash values)” insuring her life. The Divorce Decree did not specifically identify the Policy as an asset of the marital estate that was subject to division. After their divorce, the Decedent did not change his designation of Moore as the primary beneficiary of the Policy.
After Decedent’s death, Moore submitted a claim for the Policy proceeds based on her status as the primary beneficiary of the Policy. Transamerica rejected Moore’s claim, finding that her status as the Policy’s primary beneficiary was revoked by operation of law under Section 9.301 of the Texas Family Code. On the same day that it formally denied Moore’s claim, Transamerica sent a letter to Simpson informing him of his beneficiary status and instructing him on how to make a claim to the Policy proceeds. In January 2022, Simpson submitted his own claim to the entirety of the Policy proceeds.
The Court then discussed how the law applies to situations like this and based on the competing motions for summary judgment, ruled in favor of Moore. In discussing the case, the Court discussed other cases wherein there was a death after a divorce. How these cases are looked at by courts is important for a life insurance attorney to understand and to be able to appropriately advise clients on the best course of action.
As stated in the first paragraph, this case needs to be read by life insurance lawyers.