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

By Jeffry Olson, J.D.

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

By Jeffry Olson, J.D.

Life insurance pays money to a beneficiary in the event of the policy holder's death, and it's a common tool for family-planning purposes. One spouse names the other spouse as the beneficiary to ensure that the surviving spouse has money for burial expenses and living expenses in the event of the first spouse's death. However, divorce happens, and if the deceased ex-spouse had life insurance, chances are that the living ex-spouse was named in it. In the state of Texas, though, an ex-spouse does not get paid as a beneficiary under the life insurance policy after the divorce, but there are some exceptions.

Man showing document to woman

General Prohibition

After getting divorced, most people don't want their former spouse to receive money under a life insurance policy. The best way to keep this from happening is to contact the life insurance company to change the name of the beneficiary of the life insurance policy from the ex-spouse to someone else.

Understandably, in the chaos of divorce, sometimes people forget to call their insurance provider and change their beneficiary. Fortunately, Texas's Family Code steps in to help. Under state law, once a couple divorces, one spouse cannot usually receive the other spouse's life insurance payout, even if they are still officially the beneficiary.

Who Receives the Proceeds

The next issue involves determining who gets the proceeds of the life insurance policy when the policy holder dies and the ex-spouse who remains listed as a beneficiary cannot receive the funds.

In most situations, the secondary beneficiary receives the life insurance policy payout. Most insurance companies require the policyholder to name a secondary beneficiary for situations like this, in which the primary beneficiary cannot take the proceeds for some reason. If there is no secondary beneficiary, or if the secondary beneficiary is also barred from recovering the proceeds, the payout goes to the deceased spouse's estate for distribution.

Exceptions

There are exceptions to the general prohibition on an ex-spouse recovering benefits from their former spouse's life insurance policy. An ex-spouse can still be entitled to life insurance proceeds of their former spouse in three situations.

First, the former spouse can still get the life insurance payout if the divorce decree itself entitles them to it. As part of the distribution of assets, former spouses may agree to this, or a judge might order it to help balance out the financial award to each spouse or to guarantee alimony or child support.

Second, the former spouse can still receive the payment if they are the trustee of funds intended for a child or dependent of either of the former spouses. In this situation, the surviving ex-spouse has a legal obligation, as a trustee, to use the money to benefit the child or dependent.

Third, if the deceased spouse renames or reaffirms their former spouse as the intended beneficiary after the divorce, the ex-spouse can still receive the life insurance proceeds. Sometimes divorces are amicable, and it's not unheard of for a policy holder to want their former spouse to receive life insurance benefits after their divorce, either for fairness or to make sure the former spouse has enough money to care for children.

During the process of divorce, there are many legal documents that need to be accounted for, and while a life insurance policy is one of them, it tends to be forgotten about. But in Texas, the ex-spouse automatically does not receive life insurance benefits unless otherwise decreed, such as in a last will and testament. So if you do want your ex-spouse to receive benefits, make sure that's legally noted.

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