Can an Ex-wife Be the Beneficiary on Her Ex-husband's Life Insurance in Texas?

By Marcy Brinkley

When married people buy life insurance, they usually name each other as beneficiaries to allow the family to maintain its usual standard of living after one spouse dies. After the death of the insured person, the insurance company pays the proceeds of the policy to the beneficiary named on the contract. Recognizing that a divorced person may no longer want his former spouse to receive the proceeds of the policy, the Texas legislature enacted a section of the Texas Family Code to address this situation.

When married people buy life insurance, they usually name each other as beneficiaries to allow the family to maintain its usual standard of living after one spouse dies. After the death of the insured person, the insurance company pays the proceeds of the policy to the beneficiary named on the contract. Recognizing that a divorced person may no longer want his former spouse to receive the proceeds of the policy, the Texas legislature enacted a section of the Texas Family Code to address this situation.

Life Insurance

A life insurance policy is a contract that requires the insurance company to pay the proceeds to the designated beneficiary after the insured person dies. The beneficiary may be an individual, trust, charity or other entity. If the primary beneficiary has already died or is not eligible to receive the proceeds, the insurance company pays the proceeds to the secondary beneficiary. This distribution takes place automatically and is not involved in the probate court process.

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Divorce Decree and Life Insurance

A Texas divorce decree lists the property awarded to each spouse. The spouses may divide their property by agreement, or they may ask the judge to divide the property after hearing evidence from both sides. In the case of a life insurance policy, the decree names the owner of each policy. The owner continues to pay the premiums on the policy and, unless the decree says otherwise, is free to change the beneficiary or cancel the policy.

No Beneficiary Designation in Divorce Decree

Except in certain circumstances, a former spouse is not eligible to receive the proceeds of a life insurance policy on the other spouse after a divorce. If you named your former spouse as beneficiary during the marriage but you want someone else to be the beneficiary after the divorce, provide written instructions to that effect to your insurance company. If you forget to change the beneficiary designation, though, the Texas Family Code instructs the insurance company to pay the proceeds to your alternate beneficiary. If there is no designated alternate beneficiary, the company must pay the proceeds to your estate.

Exceptions

The Texas Family Code lists three exceptions to the rule that a former spouse cannot receive the proceeds of a life insurance policy after a divorce. If the former spouse has custody of minor children, the divorce decree may name that spouse as beneficiary. Alternatively, the insured person may give written instructions to the insurance company after the divorce redesignating the former spouse as beneficiary. Finally, the policy may designate the former spouse as trustee of the proceeds on behalf of or for the benefit of a child or dependent. In all of those situations, the former spouse can receive the proceeds of the policy.

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Does a Divorce Decree Nullify a Life Insurance Policy?

References

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Difference Between the Primary & the Successor on a Change of Beneficiary

Individuals name primary and successor beneficiaries on specific money holdings, including life insurance benefits, retirement plans, bank accounts and certificates of deposit in the case of their death. Circumstances such as a marriage, divorce or death can cause the individual to need to change these beneficiaries. Change of beneficiary forms can assist with this process. These forms can only be used when the individual with the specific money holdings is still alive. These forms are important because they legally trump wills in stating who will receive money upon an individual's death. They also provide the added benefit of allowing these monetary proceeds to bypass the probate process and be received by the beneficiaries faster.

What Is a Surviving Primary Beneficiary?

Your estate plan leaves directions for your loved ones regarding how you want to pass your assets to those you leave behind. Some of your assets, such as personal property, may pass under the terms of your will to beneficiaries you name in that document. Other assets, like life insurance and retirement plans, may pass outside your will, but all must go to beneficiaries who are alive at the time of your death – individuals or entities who survive you.

Kansas Regulations on Life Insurance Beneficiary Change Form Requirements

Life insurance protects your family from financial catastrophe should you die unexpectedly. It’s a replacement for lost income. Like other states, Kansas regulates life insurance through its statutes and through regulations issued by the state insurance commissioner. Life insurance proceeds pass to beneficiaries named in the contract and are not governed by your will. Changing a beneficiary is usually as easy as filling out a form, but not always.

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