What are some of the rules related to the naming of a spouse as the beneficiary in a life insurance policy?
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. This was the opinion is a 1994, Fort Worth Court of Appeals opinion styled, Street v. Skipper.
Policies may contain provisions automatically divesting a spouse of any interest in the proceeds, if the parties are “legally separated” or divorced. This is what was stated in the 1981, Eastland Court of Appeals opinion styled, Pilot Life Insurance Co. v. Koch. Also, the divorce decree may divest the former spouse of any right to the insurance proceeds, pursuant to the opinion issued in the 1987, Houston [14th] Court of Appeals opinion styled, Novotny v. Wittner. By statute, Texas Family Code, Section 9.301, a divorce invalidates any pre-divorce designation of the former spouse as beneficiary, 1) unless the former spouse is re-designated, 2) the insured redesignates the former spouse as the beneficiary after rendition of the decree, or 3) the former spouse is designated to receive the proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse. 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.