Here are a few cases discussing who is entitled to life insurance benefits. All life insurance attorneys have to know these cases.
The Forth Worth Court of Appeals said in a 1994 opinion styled, Street v. Skipper, that one spouse can designate his or her estate as the beneficiary of the policy, at the expense of the other spouse, absent any showing of actual or constructive fraud.
According to the Eastland Court of Appeals in a 1981 opinion styled, Pilot Life Insurane Co v. Koch, policies may contain provisions automatically divesting a spouse of any interest in the proceeds, if the parties are “legally separated” or divorced.
According to the 14th Court of Appeals in a 1987 opinion styled, Novotny v. Wittner, the divorce decree may divest the former spouse of any right to the insurance proceeds.
Look at Texas Family Code, section 9.301. By statute, a divorce invalidates any pre-divorce designation of the former spouse as beneficiary, unless the former spouse is redesignated. If the pre-divorce designation is invalidated, the proceeds go to any alternate beneficiary or to the insured’s estate. If the insurer pays the former spouse based on an invalidated designation, the insurer is liable to pay the proper beneficiary.
Regarding the above Family Code section, there is an important exception stated by the United States Supreme Court in 2001 when the insurance plan is governed by Federeal law. The opinion is styled, Egelhoff v. Egelhoff, and deals with the Federal plan governed by the Employee Retirement Income Security Act. The Federal law pre-empts the State Family Code.