By McClendon                                           H.B. No. 457
         76R454 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, retirement benefits, and other financial plans.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 9.301, Family Code, is amended to read as
 1-6     follows:
 1-7           Sec. 9.301.  PRE-DECREE DESIGNATION OF EX-SPOUSE AS
 1-8     BENEFICIARY OF LIFE INSURANCE.  [(a)] If a decree of divorce or
 1-9     annulment is rendered after an insured has designated the insured's
1-10     spouse as a beneficiary under a life insurance policy in force at
1-11     the time of rendition, a provision in the policy in favor of the
1-12     insured's former spouse is valid [not effective] unless the decree
1-13     states otherwise[:]
1-14                 [(1)  the decree designates the insured's former spouse
1-15     as the beneficiary;]
1-16                 [(2)  the insured redesignates the former spouse as the
1-17     beneficiary after rendition of the decree; or]
1-18                 [(3)  the former spouse is designated to receive the
1-19     proceeds in trust for, on behalf of, or for the benefit of a child
1-20     or a dependent of either former spouse].
1-21           [(b)  If a designation is not effective under Subsection (a),
1-22     the proceeds of the policy are payable to the named alternative
1-23     beneficiary or, if there is not a named alternative beneficiary, to
1-24     the estate of the insured.]
 2-1           [(c)  An insurer who pays the proceeds of a life insurance
 2-2     policy issued by the insurer to the beneficiary under a designation
 2-3     that is not effective under Subsection (a) is liable for payment of
 2-4     the proceeds to the person or estate provided by Subsection (b)
 2-5     only if:]
 2-6                 [(1)  before payment of the proceeds to the designated
 2-7     beneficiary, the insurer receives written notice at the home office
 2-8     of the insurer from an interested person that the designation is
 2-9     not effective under Subsection (a); and]
2-10                 [(2)  the insurer has not interpleaded the proceeds
2-11     into the registry of a court of competent jurisdiction in
2-12     accordance with the Texas Rules of Civil Procedure.]
2-13           SECTION 2.  Section 9.302, Family Code, is amended to read as
2-14     follows:
2-15           Sec. 9.302.  Pre-Decree Designation of Ex-Spouse as
2-16     Beneficiary in Retirement Benefits and Other Financial Plans.
2-17     (a)  If a decree of divorce or annulment is rendered after a
2-18     spouse, acting in the capacity of a participant, annuitant, or
2-19     account holder, has designated the other spouse as a beneficiary
2-20     under an individual retirement account, employee stock option plan,
2-21     stock option, or other form of savings, bonus, profit-sharing, or
2-22     other employer plan or financial plan of an employee or a
2-23     participant in force at the time of rendition, the designating
2-24     provision in the plan in favor of the other former spouse is valid
2-25     [not effective] unless the decree states otherwise[:]
2-26                 [(1)  the decree designates the other former spouse as
2-27     the beneficiary;]
 3-1                 [(2)  the designating former spouse redesignates the
 3-2     other former spouse as the beneficiary after rendition of the
 3-3     decree; or]
 3-4                 [(3)  the other former spouse is designated to receive
 3-5     the proceeds or benefits in trust for, on behalf of, or for the
 3-6     benefit of a child or dependent of either former spouse].
 3-7           (b)  [If a designation is not effective under Subsection (a),
 3-8     the benefits or proceeds are payable to the named alternative
 3-9     beneficiary or, if there is not a named alternative beneficiary, to
3-10     the designating former spouse.]
3-11           [(c)  A business entity, employer, pension trust, insurer,
3-12     financial institution, or other person obligated to pay retirement
3-13     benefits or proceeds of a financial plan covered by this section
3-14     who pays the benefits or proceeds to the beneficiary under a
3-15     designation of the other former spouse that is not effective under
3-16     Subsection (a) is liable for payment of the benefits or proceeds to
3-17     the person provided by Subsection (b) only if:]
3-18                 [(1)  before payment of the benefits or proceeds to the
3-19     designated beneficiary, the payor receives written notice at the
3-20     home office or principal office of the payor from an interested
3-21     person that the designation of the beneficiary or fiduciary is not
3-22     effective under Subsection (a); and]
3-23                 [(2)  the payor has not interpleaded the benefits or
3-24     proceeds into the registry of a court of competent jurisdiction in
3-25     accordance with the Texas Rules of Civil Procedure.]
3-26           [(d)  This section does not affect the right of a former
3-27     spouse to assert an ownership interest in an undivided pension,
 4-1     retirement, annuity, or other financial plan described by this
 4-2     section as provided by this subchapter.]
 4-3           [(e)]  This section does not apply to the disposition of a
 4-4     beneficial interest in a retirement benefit or other financial plan
 4-5     of a public retirement system as defined by Section 802.001,
 4-6     Government Code.
 4-7           SECTION 3.  This Act takes effect September 1, 1999, and
 4-8     applies only to a decree of divorce or annulment rendered on or
 4-9     after the effective date of this Act.  A decree of divorce or
4-10     annulment rendered before the effective date of this Act is
4-11     governed by the law as it existed immediately before the effective
4-12     date of this Act, and that law is continued in effect for that
4-13     purpose.
4-14           SECTION 4.  The importance of this legislation and the
4-15     crowded condition of the calendars in both houses create an
4-16     emergency and an imperative public necessity that the
4-17     constitutional rule requiring bills to be read on three several
4-18     days in each house be suspended, and this rule is hereby suspended.