By Shapiro S.B. No. 285
75R3171 MCK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the disposition of beneficial interests in life
1-3 insurance.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 3.632, Family Code, is amended to read as
1-6 follows:
1-7 Sec. 3.632. DISPOSITION OF BENEFICIAL INTERESTS IN
1-8 INSURANCE. (a) In a decree of divorce or annulment the court
1-9 shall determine all rights of both spouses in an insurance policy,
1-10 including life, casualty, liability, and health insurance.
1-11 (b) If a decree of divorce or annulment is rendered after an
1-12 insured has designated the insured's spouse as a beneficiary under
1-13 a life insurance policy in force at the time of rendition, a
1-14 provision in the policy in favor of the insured's former spouse is
1-15 valid [not effective] unless the decree states otherwise[:]
1-16 [(1) the decree designates the insured's former spouse
1-17 as the beneficiary;]
1-18 [(2) the insured redesignates the former spouse as the
1-19 beneficiary after rendition of the decree; or]
1-20 [(3) the former spouse is designated to receive the
1-21 proceeds in trust for, on behalf of, or for the benefit of a child
1-22 or a dependent of either former spouse].
1-23 (c) [If a designation is not effective under Subsection (b)
1-24 of this section, the proceeds of the policy are payable to the
2-1 named alternative beneficiary, or, if there is not a named
2-2 alternative beneficiary, to the estate of the insured. An insurer
2-3 who pays the proceeds of a life insurance policy issued by the
2-4 insurer to the beneficiary under a designation that is not
2-5 effective under Subsection (b) of this section is liable for
2-6 payment for the proceeds to the person or estate provided by this
2-7 subsection only if:]
2-8 [(1) before payment of the proceeds to the designated
2-9 beneficiary, the insurer receives written notice at the home office
2-10 of the insurer from an interested person that the designation is
2-11 not effective under Subsection (b) of this section; and]
2-12 [(2) the insurer has not interpleaded the proceeds
2-13 into the registry of a court of competent jurisdiction in
2-14 accordance with the Texas Rules of Civil Procedure.]
2-15 [(d)] If a decree of divorce or annulment does not determine
2-16 all of the rights of both spouses in an insurance policy other than
2-17 life insurance in effect at the time the decree is rendered, the
2-18 policy remains in effect until it expires according to its own
2-19 terms. The proceeds of a valid claim under the policy are payable
2-20 as follows:
2-21 (1) if the interest in the property insured was
2-22 awarded solely to one former spouse by the decree, to that former
2-23 spouse;
2-24 (2) if an interest in the property insured was awarded
2-25 to each former spouse, to those former spouses in proportion to the
2-26 interests awarded; or
2-27 (3) if the insurance coverage is directly related to
3-1 the person of one of the former spouses, to that former spouse.
3-2 The failure of either former spouse to change the endorsement on
3-3 the policy to reflect the distribution of proceeds established by
3-4 this section does not relieve the insurer of liability to pay the
3-5 proceeds or any other obligation on the policy.
3-6 (d) [(e)] Except as provided by Subsection (c) [(d) of this
3-7 section], this section does not affect the right of a former spouse
3-8 to assert an ownership interest in an undivided insurance policy,
3-9 as provided by Subchapter F [of this chapter].
3-10 SECTION 2. This Act takes effect September 1, 1997, and
3-11 applies only to a decree of divorce or annulment rendered on or
3-12 after the effective date of this Act. A decree of divorce or
3-13 annulment rendered before the effective date of this Act is
3-14 governed by the law as it existed immediately before the effective
3-15 date of this Act, and that law is continued in effect for that
3-16 purpose.
3-17 SECTION 3. The importance of this legislation and the
3-18 crowded condition of the calendars in both houses create an
3-19 emergency and an imperative public necessity that the
3-20 constitutional rule requiring bills to be read on three several
3-21 days in each house be suspended, and this rule is hereby suspended.