Every time a Texas resident in the Dallas Fort Worth area purchases a life insurance policy they are going to be asked who they want to be named as the beneficiary of the insurance policy. The beneficiary “is the person to whom the insurance policy is payable“.
The beneficiary can be an estate, a trust, a trustee, and other people or entities. Most of the time the life insurance is going to name a spouse or child, a spouse being the most common.
What happens if the spouse is named as a beneficiary and the next day, the next year, or 20 years later you divorce your spouse? Easy – just change the name of the beneficiary whom you want to receive the monies upon your demise. Ok, but what if you forget?
This issue was recently discussed in the case, Rachael Ruiz v. The Prudential Insurance Company of America. This was a United States District Court Case filed in the Fort Worth Division of North Texas. The exact residence of the parties is unknown but may have been in the Grapevine, Weatherford, Azle, or Colleyville areas of Tarrant or Parker County.
In this case, the deceased husband had named his wife as a 25% beneficiary of his life insurance policy in October 2005. The couple got divorced in September 2006 in Arkansas, then the husband died in October 2006, without having changed or removed his ex-wife from being named as the beneficiary on the policy. The case addresses other legal questions but points out and discusses how complicated the issues regarding the named beneficiary can sometimes be.
In Texas, the issue of a couple getting divorced without making changes in their insurance policies is addressed in the Texas Family Code. The Family Law statute renders the provision in the policy in favor of the insured’s former spouse as “not effective”. There are a few exceptions that have to be looked at carefully.
The above is an example where just knowing a little about Insurance Law is not enough. Here, you have to also know how the Insurance Law is inter-related with Family Law. The Law Firm of Mark Humphreys knows these laws and deals with them on a regular basis.