Wednesday, November 23, 2011

What happens if your spouse forgets to remove his/her ex as a life insurance beneficiary?

Under the Texas Redesignation Statutes, a pre-divorce decree designation of an ex-spouse as the beneficiary of a life insurance policy is void. For example, John Doe was married to Jane Doe and designated her as the beneficiary of his life insurance policy in 2000. In 2005, John and Jane get a divorce. In 2009, John passes away. Jane would NOT be entitled to receive the proceeds of the life insurance policy.

Understandably, there are a few exceptions to this general rule: (1) if the divorce decree ratifies the pre-decree designation; (2) if the insured redesignates the former spouse as the beneficiary after the date of the divorce; or (3) the Texas Redesignation Statutes to not apply to ERISA death benefits.

If a designation is void as a result of the redesignation statutes described above, the proceeds of the policy should be paid to the named alternative beneficiary or, if there is not a named alternative beneficiary, to the estate of the insured.

If you believe that you are entitled to the proceeds of a life insurance policy as a result of the redesignation statutes, we highly recommend that you contact an attorney as soon as possible to make a claim on your behalf. Please note that as long as the life insurance company pays the death benefit to the original beneficiary before receiving proper notice from an alternate beneficiary, they are off the hook and will not be liable to the alternate beneficiary!

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